Innovation in the Japanese Financial Services Industry, Part 2: Panel Discussion
Celent hosted Innovation & Insight Day Tokyo on June 5. Following the event presentation titled "Digital Financial Services and New Innovation Initiatives," which focused on Celent's innovation survey results, a panel discussion was held.
This is the second in a two-part report providing an overview of event proceedings.
Five leading experts in Japan's financial industry joined the event as panelists. Celent would like to offer a heartfelt thank-you to these individuals for taking part despite the pressure and the presence of competition and many disclaimers. The panelists’ wealth of experience and sheer passion for innovation was palpable and the content thought provoking. Above all, the impassioned and experience-informed comments of panelists displayed the confidence of Japan's financial industry. Below are some of the more salient comments that demonstrate the spirit and mindset of innovators in Japan.
What motivates your firm to innovate?
- "Responding to customer expectations."
- "A backdrop of growing user needs and the proliferation of technology and the environment to meet these needs."
- "Our objective is to remove all inconvenience from the customer experience."
- "We aspire to offer financial services that achieve exactly what people feel they need and consumers think they want."
- "Innovation is the lifeblood and fate of a corporation."
What drives innovation at your firm?
- "Aligning innovation objectives and technology employed."
- "Integrating technology and compliance is important."
- "Amplifying the motivation and drive of each employee to take action."
- "Reflecting the intentions of management."
- “Resisting the temptation to seek short-term growth.”
- "Supporting management philosophies that bet on uniqueness."
The threat and opportunity of disruptive innovation
During the proceedings there were questions and opinions from participants exchanged with the moderator:
- "There is no special opportunity for innovation. It is important to reflect innovation in daily management. That is something that we have done since we started our business and something that we will continue to do. Innovation is simply naturally part of what we do.”
- "We do not see disruptive innovation as a threat. Rather, for the development of the industry as a whole, the kind of shakeout such innovation entails is necessary. We will undergo challenges and survive—and look to take on more such challenges.”
Celent concluded the event with the below message.
Managers: Have faith and confidence in innovation
The importance of leadership and management responsibility in innovation is self-evident. At the same time, innovation is a mid-to-long-term journey—more a marathon, than a sprint. Failure is sometimes to be allowed. In addition, it is not uncommon to destroy a corporate culture that has been fostered over many years. An intense commitment to innovation on the part of management itself is required. Technological drivers continue to advance and case studies of successes only increase. Mangers: Be confident.
Distinguish between disruptive innovation and kaizen (improvement), and the need to tackle the former
The greatest factors hampering the progress of disruptive innovation are not to be found outside a company but within it. Especially within large corporations, where tendencies such as the below are seen; conversely, these tends to derail innovation. These tendencies include the following.
- Compared with start-ups and small or medium enterprises, large firms boast a wealth of capital and business resources.
- In particular, these resources include human resources and technology, which can be channeled to R&D.
- These companies often have business operations that require 360-degree management and much competition
- Such firms are often home to isolated “black sheep” employees that seek to innovate.
If you neglect innovation, cannibalization can be expected to take place not only in your core business areas but in new businesses as well. To keep innovators from being ostracized as black sheep, it is important to clearly distinguish between the accumulation of kaizen (improvement) on a daily basis in core operations and disruptive innovation, and, in particular, it is important to direct management and initiative toward the latter.
Initiatives and leadership that are not negative contribute to positive value standards
Of course, trusting in your management resources, in particular in your personnel and technology, and putting effort into your business battles over “invisible continents,” “immeasurable risk” and “non-consuming consumers” is important. However, in such challenges when results do not appear with time, then you should not underestimate the power of disruptive innovation. Furthermore, it is key “to always be positive.” Leadership and initiatives that acknowledge and embrace diversity and difference and that do not deny any possibility are needed.
Today no industry or industrial structure is immune to change and, like plate tectonics, the ground around us is always shifting. Digital technology is doing more than changing products, services, consumer experiences, and expectations; it is also radically changing value chains and business models.
Until now, Japan’s financial industry has developed by virtue of outstanding leadership and the agile introduction of technology. Celent would like to emphasize anew the importance of innovation to Japan’s financial industry, buttressed as it is by people and technology. The results of Celent’s recent innovation survey hinted at further reform to come in Japan’s financial industry. When it comes to innovation, now is an opportune time for commitments from top management and fresh initiatives from technology vendors.
Undertaking this innovation conference was a major challenge for Celent Tokyo. However, any undue anxiety completely vanished amidst the enthusiasm of survey and event participants. The Japanese financial industry is extremely positive and enthusiastic when it comes to innovation. Celent would like to express its deep gratitude to the professionals in the financial industry who took time to participate in this event in various capacities, and we hope that it will prove in some way useful to your continued success.
Fig. 2 Structures to Support Innovation: Financial Services Institution / Vendor Comparison
Source: Celent Innovation Survey 2013/2014