Is Common sense Uncommon?

By Namita Bhide CEO & Founder of Denim Consulting

simplify

verb

make (something) simpler or easier to do or understand.

collaborate

verb

work jointly on an activity or project

One of my all-time favourite TV series to binge watch was Queer Eye, which ran from 2003 to 2007, and is currently on its third reboot. The premise relies on the stereotype of gay (queer) men as experts in matters of fashion, style, personal grooming, interior design, and culture. The series is a great example of “brotherhood” as well as true camaraderie and respect between them – the experts). Collectively, magic is created, focusing on the client by working with things that are available, and by introducing new ways and different elements, essentially working towards a goal of transformation underpinned by two key principles – to simplify and to collaborate.

What’s the point?

I have spent over two decades in banking. It has taught me how important those two simple words are, but how incredibly difficult they are to implement. Surprisingly, very few traditional banks understand them well. Almost every bank is involved in some sort of digital transformation and only a few of those are going to succeed. It is important to understand business transformation first and foremost, supported by investments in new technology, and not have new technology chasing opportunities. This scenario is a guaranteed road to failure.

Banks are under tremendous pressure to be relevant. Granted, global, regional traditional banks have huge regulatory obligations across geographies, and this adds a different dimension to the problem. However, it is time for them to stop hiding behind these regulatory burdens and self-created inefficiencies. Legacy product offerings were focused on the banks’ profitability, rather than on client needs. To have a sustainable, beneficial and successful long-term relationship with clients and employees, re-thinking business models is critical.

Brett King, futurist and creator of the podcast Breaking Banks, was one the first few to predict the obvious death of branch banking.

The tug of war between traditional banks and challenger, neo- and non-banks is at an all-time high. The dog fight is at two levels for traditional banks (global, regional or digital banks) to stay relevant.

At one level, traditional banks suffer from an intent vs reality situation – they aspire to be fast, agile and transparent, but the reality is very different. The awareness that focus has to be based on client experience is key. Having worked for a few global banks in a variety of roles, I have seen that the Internal processes aren’t set up for new initiatives to succeed or for testing new ways of working. These support processes need to be enablers and not disable the new ways of working transformation/ or changes. They run in silos, which don’t consider the urgency of change.

The second level is that traditional banks have a plethora of legacy platforms and have hidden behind regulatory obligations. In addition, the client awareness of alternate options is growing. Efficiency, transparency and speed are few things that are driving them to consider new ways of working.

The neo banks, challenger banks and non-banks are setting up banking services that are enabled using new technology, launching products which are simple, easy to navigate and hence making for an enjoyable client experience.

A few examples of challenger banks and remittance services – the list is growing – include Starling, Monzo, BigPay, Oaknorth, Wavemoney, InstaRem, and Transferwise. This report from EY nicely summarises fintech adoption.

In the meantime, non-conventional players and non-banking financial services firms such as Apple, Amazon, and Google are making giant strides in the traditional stronghold for banking and financial services firms. A few weeks ago, Apple announced its revolutionary Apple Card.

The banks need to find a way to collaborate between the old and new ways of working. I have witnessed first-hand traditional banks struggle to launch new services due to a range of factors including lack of agility, legacy applications hindering time to market, and inefficient processes, leaving clients and employees frustrated. Lastly, trust within traditional banks between departments is on shaky grounds.

Innovation is a “bad” word

Innovation is an overused and much-abused word. It feels like a mandatory term used synonymously for all things to do with banking transformation.

The standard formula is to hire hip young people and add a few existing bankers into a so-called innovation lab, which is meant to create magic.

They may have a few good ideas but 99% fail as the labs work in isolation and consequently have no sponsorship and support from within the bank.

What needs to change?

In my view, innovation – or what I like to call ‘applied innovation’ – starts with the bank’s culture. By this, I mean that banks’ culture anchors on values of respect, integrity, inclusion, and responsible behaviour – to simplify, and to collaborate.

With this backdrop, employees will focus on solving problems or creating products that they would like to invest in or a service they would use themselves. It is prudent to provoke the current process and regulation. Difficult and challenging questions need to be asked to aid such simplification and drive collaborations.

Hence innovation ‘activators’ – people who specifically drive that such innovation –  – need to be embedded within the core product and support teams of the bank and NOT as an appendix to the bank. There are too many examples of global, regional and local examples of unsuccessful innovation labs that exist outside of the core activity of the bank.

It is important to listen to the folks that manage the customer fulfilment, process operations, risk, compliance, and technology teams along with product creation team. Think of it like a manufacturing progress assembly line, where risk, compliance, technology, and operations teams that help deliver the service are also given a voice or a platform. The most important thing is to understand business transformation, supported by investments in new technology and not have new technology chasing opportunities.

The other key elements to think about

– What do clients want as products and services?

– Are the products adding value for clients?

– How can we simplify the experience?

– Are the products intuitive enough to use?

Alibaba (and Taobao, which serves the Chinese markets), Flipkart, and Amazon are success stories transforming eCommerce globally and making a natural expansion into financials services into lending, and insurance as part of their value add, with client experience being at the front and centre of the company’s purpose and products.

Thus, a relatable Queer Eye analogy is focused on the client, collaborating to solve for client problems to simplify the experience. Also, this approach forges trust.

The way forward

…is what I call ‘fin-tegration’, a collaboration between banks and fintechs. It may seem intuitive, but banks need to simplify the partnership models that will accelerate not only product creation and the launch of services.

In conclusion, the clients need to be front and centre of product and services design.  Such design cannot be based on what is profitable, pleases investors, or shareholders, but should focus on the clients’ needs, products need to be intuitive, simple, smarter and faster ways to solving problems…..in short, bring common sense back in the game. This will guarantee profitability.

To keep it short – simplification, collaboration and “applied innovation” is the way forward.

In keeping with the spirit of the recently concluded World Pride Month, I would like to state again how much I believe in the strength of diverse, inclusive teams to create better and genuinely innovative solutions.