Using technology to avoid extinction: Innovation is the new adaptation 

Guest post by Stephan Hartgers

Adaptability has always been a key attribute in the pursuit of survival. The pandemic instigated an early mass extinction of many businesses that were failing to keep pace with the evolution of the digital world.

With that death came a rebirth and a rethinking of old processes and strategies. Their extinction, though a clear symptom of the virus, was for some, an inevitable outcome of the continued neglect of innovation and adaptation.

Professor Leon C. Megginson phrased it best when he said: “According to Darwin’s Origin of Species, it is not the most intellectual of the species that survives; it is not the strongest that survives; but … the one that is able best to adapt and adjust to the changing environment in which it finds itself.”

This is certainly true for businesses. Unlike the mass extinction 65 million years ago that killed all dinosaurs except for birds, existing firms in the banking and finance services industry actually have a chance to change before the meteor hits.

The targets most in danger of being wiped out are those whose existing infrastructures are neither keeping up with customer demands nor providing seamless, convenient and unique digital banking experiences. It is no longer just an option to digitally transform, but a fundamental need in creating a holistic approach to conducting better business.

Banks that don’t adapt will merely become fossils for the palaeontologists of the banking world to examine as history, not the future. The threat of fossilisation is most relevant for the traditional mainstays of financial services, who have been slow to rethink how they present their offerings, despite the risk of losing their customer base.

95 per cent of people who frequently used online banking during the pandemic expect to maintain the same level of usage

Other industries are showing us just how much is possible through the use of technology. For the last few years, retail companies such as Amazon have been utilising digital techniques used by banks and fintechs in order to deliver smoother customer experiences.

The American e-commerce giant has recently acted on their own technology-based vision for the future in their cashierless, “just walk out” store.  Companies are increasingly moving into the cashless transaction industry, with UK Finance data finding that transactions using coins and notes fell by 35% last year.

Non-banks are quickly becoming challengers to the traditional institutions that are neglecting the digital innovation that the lifestyle of a 2021 customer demands.

Digital opportunity knocks

The crisis of the pandemic undoubtedly forced banking and financial services companies to boost their adoption of digital technologies and transform operations by using digital solutions. This has included innovative payment solutions, open banking and personalised online customer engagement.

Traditional banks are now scaling digital offerings, but it is how they continue to do this that matters, as a customer-centred ideology has become central to the digital revolution. What started as a short term strategy to see banks through the pandemic needs to translate into a long term, consistent way of banking for the future.

Failing to do this isn’t an option. TSB’s recent Money Confidence Barometer research is a testament to the importance of acclimating to the digital world – they found that 95 per cent of people who frequently used online banking during the pandemic expect to maintain the same level of usage in its aftermath. This is indicative of the growing appetite among customers for greater use of digital in their everyday life.

In today’s digital world, the only protection against extinction requires active evolution

This development has provided space for digital opportunities in the banking industry that can fulfil the need for better digital experiences. This is no time to be lazy – just as with evolution, innovation is never done.

It is a continuous quest to creatively improve and achieve more. Losing momentum, or failing to think about the future of transformation risks causing stagnation that would threaten the relevance, purpose and uniqueness that customers crave from their banking experiences today.

Using digital securely

As digital transformation continues to accelerate, and customer interactions become increasingly digitised, banks must also ensure that cybersecurity is integrated into digital innovation strategies. It is not enough for companies just to implement technologies, they need to know how to apply them securely.

Digital is a powerful tool but the true opportunity lies in its application. You could be driving the world’s fastest car with all of the latest technology to win the race, but without the knowledge of how to drive it, it is likely to end in disaster.

With growing reports of cyber attacks each month, banks need to prepare for digital assailants searching for vulnerabilities in interconnected digital systems. These methods are evolving at a pace that doesn’t allow for laziness.

Safeguarding the future of digital innovation requires an implementation strategy that can comprehensively create a secure infrastructure for digital innovation to flourish. The opportunity of digital innovation must be seen with technology as an enabler, not a means to an end.

Separating innovation from transformation to drive business impact

Digital innovation has the capacity to take companies forward, but it is not a blanket strategy, a one-size-fits-all template, nor a one-way ticket to success.

The banking and financial services industry requires a deep look at what services they have and how they can use digital innovation in a way that takes their offerings to the next level. How you apply innovative technology is just as important as the technology itself because, as in life, you can have too much of a good thing.

banks need to act on accelerating innovation now and focus on creating a vision for their future that can streamline the antiquated strategies

Successful digital transformation starts with the innovation team at the beginning of idea generation. With a cohesive focus and vision for digital from the onset, it will not only provide clearer benefits for the customers but for the business itself.

The options for future innovation continue to grow, with their ability to innovate faster, cheaper and better. In today’s digital world, the only protection against extinction requires active evolution. It is not about having the strength and size of a dinosaur, but the adaptability and perception of their surviving avian relation; birds.

In other words, banks need to act on accelerating innovation now and focus on creating a vision for their future that can streamline the antiquated strategies of the past. Several financial institutions already demonstrate the ability to create new business models, products and services using a structured approach to organising digital innovation in innovation hubs or factories.

A large bank in The Netherlands for example uses a process of ideation, experimentation, rapid prototyping and user validation to find and develop those initiatives. Multiple companies have been created already as a spin-out of the innovation hub, creating value for customers and generating new sources of revenue for the bank.

In the future, digital innovation will take the form of innovation hubs creating new solutions, integrating AI and machine learning into personal finance management, smart chat assistants and the optimisation of customer loyalty in the shift to digital banking, among many others.

All of these can help to achieve better services and newer products. A bespoke approach to transformation enables businesses to offer more satisfying and more personalised customer experiences that challenge the cold, impersonal imagery often associated with the introduction of new technologies.

Stephan Hartgers is VP Digital Strategy at Mobiquity


Overcoming the challenges of digital transformation