It’s never been done before

"It's never been done before" is a refrain one often hears in financial services. There are also significant variations on the theme, such as "we are fast followers", or "where are your references and case studies?". The whole is representative of a lack of faith that bankers, banking technologists, and their associated consulting firms, services providers, and other parts of the ecosystem, have in their ability to determine what is a good thing and what isn't.

The fact is, most people in financial services don't think they have the ability to make a correct call in the absence of someone else making the correct call first. Now, they will never admit this, of course, and if you dare to tell someone they are "risk averse", you have to watch out. I know this, because I did an experiment during the week where I actually called as many people as I could on their risk aversion, and not once did anyone agree me with that they were unable to take a "first of" decision. Some were actually insulted, even though I'd thought I'd made the comment in the most supportive terms possible.

But perhaps what I think is supportive, is actually confrontational when it comes to the risk averse. Or perhaps I fail to know myself sufficiently that I can't tell the difference between supportive and confrontational behaviour.

Regardless of that, the need for evidence that someone else has succeeded before a new decision can be made is an epidemic in our industry. It is also the reason that bankers aren't considered innovative. More importantly, though, it is the reason that when one sees real innovation, it more often comes from organisations that aren't banks, such as financial services start-ups Zopa and Wesabe.

Banks are not "less nimble" than such organisations, and certainly they have far more resources available to pursue uniqueness, should they care to do so. Neither are their people less able to come up with great ideas: my own team processes thousands upon thousands a year, and a significant proportion of these are truly great.

The success rate, however, for most institutions, is quite low. Too scared to make that first decision, most of the time.

The thing which truly bothers me about this is that evidence exists that when bankers go out on a limb and make "first of" decisions, substantive paybacks are available. I especially like the Canadian ING Direct, which changed the face of direct banking for everyone else, and did so, apparently, despite opposition from its Netherlands based parent. Or Caja Navarra, whose innovations around Customer Rights have propelled it from the bottom to near top of the league table of savings banks in Spain. And lets not ignore the cleverness of smaller institutions like US based Advanta, who with their BizEquity product are taking the first steps towards self-assessed credit in the business market.

These companies, and so many others, have proved the value of dumping the "its never been done before" culture of banks, and proving that real value can be the result.

The real answer to the dilemma posed here is to work out how to provide a level of reassurance to bankers that they can actually make a good call in the absence of supporting evidence from other banks. And coupled with that, the need for bankers to recognise that a bad a call, a failed call, is actually not the end of the world.

Am I reaching for the stars here? I don't think so, but I do recognise that – as with all things related to innovation – perseverance is the key.

One Response to“It’s never been done before”

  1. April 23, 2009 at 10:05 am #

    Welcome back, James!
    A great post and one that may contain the answer to the question you raise. Are banks risk averse, or are those who propose change, selling it wrong?
    Here’s why I suggest that. I don’t think banks are inherently risk averse. Look at what they do elsewhere. Take marketing.
    One “conservative” bank’s TV or print media campaign spend vastly exceeds your entire annual innovation budget. Yet a bunch of external guys from an ad agency can convince that bank’s bosses to move from an ad showing a horse running across a beach to a cartoon series with a weird soundtrack. Cost?
    £16.162 Million. The bank in question has the market’s biggest marketing spend (£34.797 Million). That’s pretty brave, or risky, don’t you think, given that the payback is unclear?
    Could it be that it comes down how the idea is sold – or rather, not sold?
    After all, when you posed what you thought a seemingly innocuous question, some people got upset. Maybe your idea pitch sometime goes the same way…
    Perhaps you need to use a marketing style of pitch rather than a conservative value-style pitch.
    After all, it works for your ad agency…

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