the case for more innovation in banking

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®

http://clientific.net/

http://www.banksolutionsgroup.com/

http://www.bankinnovatorscouncil.org/

http://www.jpnicols.com/

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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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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A free membership organization that supports, promotes and facilitates innovation within and amongst its

member banks.

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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.

[email protected]

@JPNicols

www.jpnicols.com

http://www.banksolutionsgroup.com/

http://clientific.net/

http://bankinnovatorscouncil.org/