Confessions of a Fintech Innovator #3
The price of innovation for a Bank is too high, and managers mostly focus on incremental improvements.
Part 3: The innovation tax
The price of innovation for a Bank is too high, and managers mostly focus on incremental improvements (safe, and rewarded with promotion), rather than radical rethinks of how to do things properly (frowned at for even suggesting).
When they do try to do things properly, they tend to over-capitalise.
One Billion Pounds for the Digital Transformation Programme.
One Billion Pounds?!
Entrepreneurs will scoff. “See what we could do with just a thousandth of that.
In FinTech, entrepreneurs can pivot until they find the right opportunity to exploit. They ruthlessly pursue efficiency on a very small problem and then use this advantage to arbitrage the competition. They can then start scaling out – becoming a greater and greater part of the supply chain in the process. Once they’ve reached sufficient mass, they start building relationships with regulators and apply for Banking licenses. The incumbents simply can’t compete with this ferocious culture of adaptation.
Banks see innovation as costly and often unnecessary. New ideas are shot down more enthusiastically than the D-Day landings. Those that make it through are assessed for how quickly they can get senior air-time, and then propelled to the front of management updates. The hard stuff is weeded out. “We can do the interesting stuff when we’ve hit our targets” is a phrase you’ll often hear. “Let’s just focus on quick wins”. Those who do try and do the right thing will be shot in the back like defectors. You won’t hear any cries of “over the top, lads” in a Bank any time soon. They’ll be digging their trenches, but from senior leadership to the graduate intake – the orders are to do as much as possible but never, never, challenge the status quo
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