Innovation in Banks: Selecting the Best Models
Threats from new entrants and incumbents motivate banks and other financial institutions to invest in innovation in a variety of ways. Celent has identified six main models that banks use today to increase their visibility into new products, services, and technology, and to improve their innovation capabilities.
This report reviews these models, provides case study examples, and outlines key dimensions of each. It also provides an analysis framework for banks to use to optimize their investment levels among the different options.
“How innovation will impact the financial services business in the future is a guess,” says Mike Fitzgerald, a senior analyst with Celent’s Insurance practice and coauthor of the report. “When facing such uncertainty, diversification is a prudent strategy. Celent encourages banks to clarify their preferences related to key considerations, evaluate multiple innovation models against these choices, and then select and implement the most appropriate methods.”
“The approaches outlined offer a variety of features that can allocate innovation investment in ways consistent with the bank’s risk appetite, culture, and customer base,” says Dan Latimore, senior vice president of Celent’s Banking practice, and coauthor of the report.