The digital transformation in finance is fast gathering pace, with the banking industry in serious risk of being left in the dust. Banks are quickly finding themselves losing business to FinTech companies as more and more people that did not have access to banking services previously start to come onboard. Similarly, the convenience offered by new entrants such as FinTech startups and Big Techs is often superior to the banking system, resulting in existing customers migrating over to their platforms. Here are some reasons why banks need entrepreneurs – employees with an entrepreneurial mindset – to keep up:
The right people
CFTE co-founder Huy Nguyen Trieu is a firm believer that banks must have “the right people” in place to cultivate and champion innovation efforts. If individuals with an entrepreneurial mindset are in charge, it is more likely that they will be looking at how to innovate. This is largely because many top-level executives in banks are from a generation used to standard procedures and processes, with many not being used to experiment. Which leads us to the next topic…
Open to change
At Money20/20 Asia, Akiko Taguchi of Lumenlab highlighted that banks could solve problems while learning simultaneously if they collaborated with startups. This requires a mindset change as startups are using to pivoting and moving on quickly in order to find a solution to problems, while banks are more risk averse. While it is not necessary to revamp processes and standard procedure completely, an openness to change is key if any innovation is going to occur within a bank.
This is probably the last thing you want your bank to do, but this is not a suggestion that rogue employees are needed! Most banks have never really incentivised employees to try to build new things or improve existing ones when the likelihood of success was not clear. However, with FinTech becoming more prominent, banks must be open to “risk” and embrace uncertainty. A “fail fast” culture will not only help to identify best practices quicker, but will lead banks away from tradition in order to avoid becoming stagnant and irrelevant.
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