Accenture Banking Blog

In the first two parts of this series, we talked about outside-in change created by digital disruption and opportunity, as well as some of the barriers in the way for banks and insurers.  In this blog, I’d like to shine a light on a few useful tactics for creating outside-in change: design thinking, embracing regulation, digital culture and innovation pipeline.

Design thinking: human-centred design

The entry of smaller, more agile competitors into the FS market is putting traditional ways of doing business at risk. In order to meet challenges and realize opportunities, it’s time for FS firms to change the way they think about customers and clients. Design thinking has long inspired and empowered innovation in companies outside of the FS industry. It is an empathetic approach where the customer is put at the centre of design and it allows for divergent and creative thinking around the client’s needs. For banks and insurers often used to process or product oriented thinking, design thinking helps the response to outside-in change.  By drawing from the designer’s toolkit to integrate the needs of customers with the possibilities of new technology, design thinking enables firms to innovate at a rapid pace and become more relevant to customer’s lives.

Embracing regulation: open banking as an opportunity not a burden

As I mentioned in my first post of this series, one of the most interesting outside-in changes affecting FS firms is the rollout of European Union’s revised Payment Services Directive (PSD2) and the UK’s CMA legislation. If implemented effectively, open banking holds the potential to unlock innovation and greatly improve the customer experience. Banks should re-imagine their value chain to enable business growth and re-invention (e.g. through APIs). FS firms should adopt a ‘plug-and-play’ approach towards external capabilities by making their operations open (e.g. flexible and standardised APIs). Like most changes this will take time to catch on with clients and there will be different customer appetites for sharing data, but embracing these regulations as a potential opportunity will help stimulate innovation, leading to new customer-driven interactions and new partnerships.

Digital culture: changing the ‘way we work around here’

Digital transformation isn’t really about individual technologies, but about how these technologies can change how a business serves its customers, even ‘who we are’ and the ‘way we work around here’. So digital transformation has a lot to do with purpose and culture. FS leaders need to nurture a people-first culture, powered by diversity and fuelled by a growth mindset towards digital talent. FS firms need to recognise that they are no longer competing for the best people within the industry, but with cutting edge technology and digital organisations. To compete for the best talent in the market and be an effective digital bank or insurer, leaders need to start to change ways of working. New behaviours and mindsets need to be nurtured over time, with support from leaders and space to develop new ways of working. As this happens there will be organisation barriers to be removed or adapted (e.g. performance management, rewards, KPIs, capital allocation). Part of this cultural transformation is being more open to ideas and partnering outside the organization.

Innovation pipeline: creating a clear path to scale

More big FS players are setting up innovation labs and centres to support their digital transformation journeys. These can be excellent sources of new ideas and a space to prove value through prototyping, testing and proof of concepts. They provide a great interface to work with external digital partners and fintechs. However, as long as these experiments remain wholly separate and are not scaled across the entire organisation, they will not add sufficient value. There should be a clear path from the lab to how innovation is moved rapidly into large scale change. Seed funding and tranche funding becomes particularly important to move at pace. Also, innovation should also be nurtured and encouraged across the organization through bottom-up innovation and creativity. A view of the innovation pipeline needs to be paired simultaneously with top-down investment prioritisation and view of business architecture, in order to understand what innovation bets to place aligned to business value and strategy.

There are many other responses to outside-in change, but these four tactics have proven very helpful to many organizations: design thinking, embracing regulation, creating a digital culture and accelerating the innovation pipeline.

In my next post, I will examine the workforce implications of outside-in change.

To find out more about digital transformation in FS or join one of our Change Director Forums run around the world, please contact me here

With special thanks to Elitsa Nacheva and John Watson.