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Open Innovation: a key competitive factor for banks

Open Innovation: a key competitive factor for banks

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Published by: Crowdsourcing.org on Mar 04, 2014
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Open Innovation: a key competitive factor for banks
GFT study reveals: financial institutions must be open to external initiatives
Stuttgart, 4th March 2014
 A bank asks its customers what it could do to improve and then awards a prize for the best suggestions. Another includes its employees in the development of
new service standards. Just two examples that are rooted in the idea of „open innovation‟. What
is special about this: external partners, with all of their experience, expertise and skills, are specifically included in the innovation process. The potential that open innovation yields for  banks has been captured in a new study released by GFT, a leading international IT solutions  providers to the financial sector.
“The marke
t conditions for financial service providers are
changing increasingly rapidly,” states Marika Lulay,
Chief Operating Officer at GFT. New technologies are forcing their way into the market and compelling bankers to make a move or be left behind
. “The financial crisis had a rapid impact on customers, whose loyalty plummeted. That‟s why it‟s
increasingly important for financial institutions to differentiate themselves with innovative  products and services
including from new competitors.” Example
s of such competitors are e-commerce companies or businesses offering payment services. In essence, everyone wants a  piece of the action.
The GFT study, “Open Innovation in the Financial Services Sector – 
 why and how to take
action”, reveals how banks can
deal with the new pressures of innovation. Momentum to change does not just come from within, i.e. from in-house development departments, but rather from external sources. External partners
 suppliers, customers, designers or partner companies from different industries
 are the ones shedding new light on the issue of innovation. The advantage: they are often much closer to the target group or can infuse stale ideas with fresh, new, out-of-the-box thinking.
According to Marika Lulay, “Traditionally, banks
do tend to be early adopters of new technological solutions, but these innovations are generally geared towards the institution itself
and the processes it has running in the background. In the digital economy, however, it‟s
important to make the customer benefit more visible and tangible. In other words, in many cases
 banks must completely rethink their approach to innovation.”
 The study includes examples of successful open innovation programmes, revealing just how  broadly the new methods can be applied. These range from crowdsourcing (where end-customers are included in the development of products and services) to corporate venturing (where companies invest in start-ups). For companies thinking about implementing open innovation themselves the important thing to note is that the approach taken must tie in closely with the
company‟s overarching strategy. After all, the key to successful open innovation is a willingness
to open the door to ideas from outside the business.
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