Mar 19 2021

How Financial Services Can Create Innovation DNA

When it comes to technology, embedding a forward-thinking culture can build success for the financial sector.

In the data-driven world of finance, there’s a simple rule for success: Get innovative or get out of the way.

The caveat? While it may be simple, it’s not easy. Financial firms have historically been reluctant to deploy new technologies for fear of security, compliance and complexity concerns. However, as pandemic pressures persist, it’s clear that staying the course isn’t sufficient.

Consider the operational need for banks to reduce IT costs without sacrificing service delivery. While this offers a way to streamline current processes and lays the groundwork for more agile and adaptive services, it’s not enough in isolation.

Now, making the most of mobile market shifts and embracing new consumer expectations demands a different approach: innovation DNA.

What Is Innovation DNA?

Coined by professional services firm Accenture, the term innovation DNA describes the need for financial services organizations to create a fundamental culture of innovation that combines people and processes to maximize market potential.

Paula O’Reilly, a managing director in Accenture’s financial services practice, explains that “Innovation DNA is the unique underlying roadmap a bank has that will help it keep the business operational during times of challenge, as with the global pandemic, and will also help the bank grow.”

This speaks to the dual nature of innovation DNA: While baking this approach into banking practices at scale is critical for sustainability, it also forms the fundamental framework of growth. According to O’Reilly, “Banks with an innovation DNA culture will continue to be positioned to meet the ever-changing needs of both customers and employees, and to build and launch new capabilities faster and at scale.”

How Does Innovation DNA Impact Operations?

In principle, innovation DNA serves as a digital guideline for banks to improve service at scale. In practice, O’Reilly highlights two key approaches:

  • Decoupling applications from legacy infrastructure. As discovered by Accenture in a recent survey, more than 90 percent of banks now have at least a moderate number of workloads operating in the cloud, but only 45 percent are satisfied with current cloud results. Improving outcomes means deploying innovation DNA to decouple applications from their legacy infrastructure when moving to the cloud. “This enables banks to build a platform that is flexible and can run new technologies like APIs and microservices alongside their legacy systems using agile methodologies,” Accenture notes. 

MORE FROM BIZTECH: How banks use AI to deliver a personalized experience.

“These emerging technologies are an area where banks can carve out their DNA roadmap by experimenting and determining where best to implement solutions such as blockchain technology, applied intelligence and others to create unique business solutions that can set them apart from the competition,” O’Reilly says.

Why Do Financial Firms Need Innovation DNA?

Falling costs and growing adoption of cloud frameworks across financial markets mean technologies are no longer the driving factor in differentiation. Customer experience now delivers the critical competitive edge, and banks that offer a customized and connected consumer experience will stand out from the crowd.

This is the fundamental feature of innovation DNA. By decoupling key services from old architecture and deploying cutting-edge technologies, firms can navigate current COVID-19 markets, adapt to emerging experience expectations and create a culture that drives digital transformation.

“Innovation DNA will be critical as financial firms chart their course in a post-pandemic world,” O’Reilly says. “By combining technology and human ingenuity, using things like sentiment analysis, building a digital personality for chatbots and digital interfaces, and, most important, knowing when to direct the customer to a human being, innovation DNA provides the foundation to create compelling customer experiences — and get them right.”

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