the case for more innovation in banking
Post on 17-Oct-2014
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The Case for More Innovation in
Banking
He is the CEO of Clientific, a partner at Bank Solutions Group, and the co-founder of the Bank Innovators Council. He has served in senior roles at top financial institutions, including as the first Chief Private Banking Officer for U.S. Bank. He writes about leadership and innovation at jpnicols.com.
A leading voice for innovation, strategy and leadership for the future of financial services, JP combines 20+ years of experience with a fresh perspective on combining high-tech with high-touch. His work has been featured in some of the industry’s top publications, including American Banker, Investment News, BAI Banking Strategies and Bank Innovation.
JP Nicols, CFP®
Today’s banking leaders came up in the industry during a time of (mostly) rising asset prices…
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S&P 500 1980-2007
Asset Prices
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…and (mostly) falling interest rates…
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10 Year Treasury 1980-2007
Interest Rates
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… all in an era of deregulation…
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Era of Deregulation
Source: Center for Economic and Policy Research
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…and then…
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200810© JP Nicols, 2012-14
A lot of bankers think that 2008 was just a bad year,
or the start of a rough patch.
Part of a normal cycle.
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Inside of the industry, in terms of asset prices and
liquidity, that’s pretty true.
But it was also an important milestone of a
new era.
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Let’s look at the banking industry
through a familiar lens…
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Threat of New Entry
Supplier Power
BuyerPower
Threat of Substitution
Competitive Rivalry
Porter’s Five Forces
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This era of RE-regulation is a useful proxy for supplier power
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Supplier Power
The number of financial institutions is shrinking, but that’s not a positive force in this case. The largest that remain are
bigger and more powerful than ever…
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2007 2008 2009 2010 2011 20125000
5500
6000
6500
7000
7500
8000
8500
Credit Unions
Banks
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Threat of New Entry
Financial services companies used to be gatekeepers of closed
platforms and asymmetrical information, but customer power is
growing, and their expectations are changing.
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BuyerPower
…and getting more complex…
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…and expanding exponentially…
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Data Explosion
Source: CloudTweaks
…and our customer’s expectations are no
longer just shaped by other banking competitors
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…and it’s not going to get any easier for
banks…
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FinTech M&A 2013$2.97 Billion
Tripled Since 2008 Accenture
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Changing of the Guard
$41 Trillion*
Wealth of Gen X + Gen Y expected to exceed Boomers
by 2018
*90% of heirs switch advisors
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Worst of all, financial services used to have no
real substitues…
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Threat of Substitution
The pace of change is ever quickening…
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Time to 50MM Users
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…yet we don’t seem to be taking this very seriously
as an industry.
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Where is Our R&D Spending?
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No wonder we’re not perceived as being a very
innovative industry.
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Most Innovative Global Companies
Banks; 4%
BusinessWeek Top 50
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So, how do we avoid the Fate of the “Dumb
Pipes”?
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Think about how telephone companies
have changed their marketing over the years…
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From Pin Drops…
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…to Screen Shots
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It’s not about your branch network, or your ATMs or even your mobile banking platform. Those are just your “dumb pipes”.
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It’s about the quality of the content you can deliver through those
pipes.
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In what domains can you truly be the best in the
world?
Treacey & Wiersema said probably not more
than one.
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Operational Excellence
Customer Intimacy
Product Leadership
The Discipline of Market Leaders Michael Treacy and Fred Wiersema, 1995
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So did Hagel & Singer.
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Customer Relationship Management
Infrastructure Management
Product Innovation
“Unbundling the Corporation” Harvard Business Review– John Hagel and Marc Singer, 1999
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Do you have what it takes to truly compete in one domain, and partner for
what you need in the others?
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Customer Relationship Management
Infrastructure Management
Product Innovation
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R&D, Entrepreneurial mindset
Customer Relationship Management
Infrastructure Management
Product Innovation
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Scale, Efficiencies, IT Investments
Infrastructure Management
Product Innovation
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Customer Relationship Management
Data analytics, partnerships, focus
It’s hard to innovate in banks. It’s even harder
doing it alone.
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A free membership organization that supports, promotes and facilitates innovation within and amongst its
member banks.
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Representative member job titles
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Our workshops and Lab Days are not lectures, or conferences, or demonstrations– we roll up our
sleeves and work through ideation, design thinking and creative problem solving techniques
together– in a safe, confidential and curated environment.
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Then again, there’s always Plan B…
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jp@jpnicols.com
@JPNicols
www.jpnicols.com
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