Friday, 30 June 2017

Banks Are the Snails of the Financial Industry

In today’s fast-paced financial industry, it is important to keep up with your competitors in order to offer the most value to your customers. Unless you are a bank. The pressure on banks to innovate is minimal and they have very little reason to do so. Here are the ten reasons banks elect not to innovate.

Public Appearance vs Actual Results:
  1. Banks use an innovation theatre to publicize their “progress” when they actually aren’t rolling out new services to clients.
  2. Thwarted by Tradition: Old, clunky technology and overgrown systems are difficult to update.
  3. Regulators: Few banks are forced by customers to change. Only regulators have the power to force banks to change their practices. On the other hand, unless the regulator allows a new service, banks won’t consider trying to create one.
  4. Undercutting Revenue Streams: Creating a marketplace in which third parties sell products that outcompete bank offerings at a lower price isn’t welcomed.
  5. Innovators aren’t Target Employees: Banks tend to favor those who tow the company line, so the matrix necessary to promote new ideas is extinguished.
  6. Low-Risk Culture: Risk minimisation epitomizes banking culture, which directly conflicts with change. Change is almost impossible if you don’t deviate from the safe way of doing things. Banks don’t allow risks, and if you don’t succeed your career is in jeopardy.
  7. No Change from the Top: The leaders of banks have followed the traditional methods of banking to achieve their status and technology might upset the system they’ve put their faith in. Without funding and approval at this level, innovative ideas cannot be put into action.
  8. Peripheral Innovation: Innovation can occur in marginal, departmental compartments, but is never internalised across the enterprise.
  9. Fear Kills Innovation: Banks just can’t allow new things to take over. New technology might destabilise the bank.
  10. Nobody Else is Doing This: Bankers have the mentality, “if our competition isn’t doing it, then we have no reason to” (although this is the whole reason a firm should innovate). 

Because of these reasons, modern, financially-progressive investors seek advisors who differentiate themselves from the slow-moving culture of the old banks. At Just Service, we offer financial service and support solutions for financial advisory firms, allowing firms to automate workflows and seamlessly provide consistent advice to their customers.
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