In 2008, the approval rating for banks dropped. And it dropped again in 2009.
The approval rating for some banks dropped more than others during those dark recessionary days, Wells Fargo & Co. and Citigroup being the two most prominent examples.
All this negativity swirling around banks back then led to a wave of innovation. Banks realized that they could no longer just plod along printing profits, but rather had to invest in new products and services and generally revamp and invigorate their businesses.
That innovation energy may be waning.
New data from our State of Banking Innovation Survey for Winter 2014 suggests that banks are less optimistic about their own innovation. For example, we asked members of the banking industry (most, but not all are bankers) to rate their company’s brand for its level of innovation. For the fourth consecutive time, the weighted average rating for brand innovation has dropped.
According to our most recent data, banking industry participants rate their company’s innovation a 3.27, where 1 is “poor” and 5 is “excellent.” That compares to a weighted average rating of 3.34 last summer and 3.73 in early 2012.
Admittedly, it is hard to pinpoint why bankers are considering their company’s brands less innovative today than in the recent past. While it could be that standards for whether a company is or is not innovative have increased, I tend to consider the data on its face value. We are asking how innovative is the company’s brand and the answer we are getting is, “less innovative.”
It should be noted that according to our data, the percentage of financial institutions that participated in our survey (there were 50 this year) with “dedicated innovation teams” has declined to around 48% from 55% last summer. Now, our readers tend to be innovators — why else would they read Bank Innovation? — and that percentage change is within the plus/minus of the survey data, but, as an indicator, still seems to imply that innovation is not necessarily progressing.
What to make of all this? As the credit crisis increasingly becomes a distant memory, those 69% approval ratings for Wells and Citi become distant memories, too, and attention turns to the P&L. That P&L, I am sad to say, can become a blinding light indeed.
Learn more about what’s next in banking at Bank Innovation 2014 on March 3-4 in Seattle. Request an invitation here.
Clearly, there is a very big gap between the traditional definition of Innovation and the perception of what Innovation means to Bankers.
Just for the record, Innovation is typically defined as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Innovation is something original and, as consequence, new that “breaks into” the market.
On some level, I think you are certainly correct. Times change, definitions of “innovation” change, perceptions about brands change.
But I wonder — and I certainly don’t have any firm proof for this — whether these changes in perception mirror a change in reality. I raise this possibility because we all care deeply about banking innovation and don’t want to see it flounder.
What do you think, Serge?
I think that the big issue with innovation programs at large banks is that they forget the two most important types of innovation: cashflow innovation/business model innovation and innovation in customer experience overall. As long as banks think inside-out in terms of ‘multi-channel’ and ‘channel-integration’, this trend will continue.
The result? Most banks are following ‘me-too’ digital strategies instead of listening to their most loyal customers. I did a survey of digital strategies in The Netherlands last years and all banks (large and small) were doing the same things.
That might be the answer to your question and this trend.
Regards,
Tony de Bree