Financial Services Innovation Laboratories: Collaboration Between Third Party Solution Providers and Their Clients
Celent has released a new report titled Financial Services Innovation Laboratories. The report was written by senior Insurance analyst Michael Fitzgerald and Banking analyst Jean-Marie Ubigau.
This report provides a profile of co-innovation activity between service providers and financial services firms (banks, insurance, and securities firms) being accomplished through dedicated locations commonly described as “innovation labs.”
The objective is to construct a detailed view of the efforts under way in third party innovation labs and provide key metrics about them, including:
- Numbers and types of customers served.
- Physical locations.
- Types of innovation pursued (disruptive vs. incremental).
- Types of projects pursued (digitization, customer experience, analytics, etc.).
Since 2011, the number of innovation labs as seen an almost 5x increase, with the most significant jump occurring in 2014. India leads in terms of number of lab locations, and London is the city with the most sites.
Prototyping, solution design, and innovation strategy are the major effort areas. Solution coding is only 15% of activity. At 42%, the EMEA region (Europe, Middle East, and Africa) has the largest percentage of customers participating in vendor innovation. Additionally, banks comprise over half of the active consumers of innovation labs.
“Celent groups innovation into general types: Incremental, which is focused on the existing business model, and Disruptive, which deals with new business models and/or building new markets,” says Ubigau. “On average, the time spent on Incremental and Disruptive innovation is split 50/50.”
“Partnerships with third party technology providers can reduce the expense outlay required to set up an internal lab, thereby addressing some of the cultural biases toward risk avoidance,” says Fitzgerald. “Technology partners can also contribute experience with agile development methods and a familiarity with emerging technology.”