The Coronavirus is a Forcing Function for Financial Services Innovation – Innovation Excellence
“Some people don’t like change, but you need to embrace change if
the alternative is disaster.”
–Elon
Musk
The Coronavirus is having a big
impact in financial services, and is going to have an even greater impact on
innovation. Why?
Because the Coronavirus has
made digital innovations essential to running a business no longer optional.
As the deadly virus has grown to pandemic status, the status quo financial
services solutions have become obsolete. Old ways of transacting business are
no longer feasible. In this environment, customers and businesses need to
interact from their homes and businesses without going out in public. Transactions
must occur in new and innovative methods (aka digitally). Yet many financial
services organizations are not equipped to operate digitally.
The Coronavirus will of course affect
everyone due to the drop in the financial markets and shortage of investment
capital. But if you look even further inside the inner workings of financial
services companies, you will see a disparity in each company’s response and
impact based on how their organization has been approaching their strategic innovation.
There are a handful of companies that have embraced change to become digital;
and a majority of companies that have continued with the status quo, content
with small, incremental changes that perpetuated their existing business
models.
Those financial services
companies that have embraced change through a viable digital innovation
strategy will weather this predicament the best. Specifically, they will find
themselves the best prepared because they listened to their customers, watched
the changing market, and adopted. They are the organizations that have robust
innovation programs with people, processes and tools that deploy new solutions.
They invested in digital innovation programs that are now functional. Their
results developed digital solutions across various platforms, and have non-contact
methods for customers to transact business, even during a pandemic.
On the other hand, companies that
have not been prioritizing digital innovation will be the least prepared, and
will suffer. They may have placed digital innovation on the backburner, or may
not have invested in innovation at all. They chose short-term growth preferring
old methods over real change and innovation. Their strategies will quickly be
exposed for what they were—mere tactics to further the short-term goals of the
organization and pad quarterly/annual statements. Their leaders’ lack of real
innovation strategy and foresight will become evident because they’ve rested on
the same tired tactics such as expanding physical locations, building more
brick and mortar stores, and enhancing in-person interactions.
As the Coronavirus continues
to impact financial services, it will become a forcing function for true
change. Status-quo organizations will have to quickly assess their shortcomings
and build solutions to try to stay solvent. During the next few months (in delinquent
financial services companies), you can expect to see:
There are a lot of companies that claim to be innovative, but very few actually are. They have talked a good game of digitization but mostly stayed on the sideline preferring to avoid the risk of change. Now, because of the pandemic, they will be forced to take a more realistic approach towards their innovation in order to survive.
Mick Simonelli built and led the USAA innovation program to best-in-class and now works as a strategic innovation consultant for financial services organizations. Mick also curates “Practical Innovation”, an innovation newsletter with 27K subscribers. He enjoys conducting strategic innovation assessments to assist his clients in developing a practical strategy to quick success.