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Integrated Loyalty: How Uber and Capital One Embedded Loyalty into the Customer Experience

November 22, 2016 by JP Nicols

This is the last of my special Invested in Tech series with Capital One, where I have been taking a look behind the scenes at how they are using technology, innovation, and design to create a better banking experience. In my last post I spoke to Naveed Anwar who runs Capital One’s developer community partnerships and integrations, and he talked about their unique partnership with Uber.

It’s become well-worn trope in fintech punditry to declare such and such an app or company as the “Uber of banking”, presumably meaning both that it’s a seamless customer and payment experience, and also something with massive growth potential. When I speak at banking conferences I often ask for a show of hands for how many people use Uber as a way of demonstrating the rapid growth of disruptive technology. A majority of hands always go up, and it is easily in the 80-90% range in any major urban area.

I tell the audience that they would have called me crazy if I would have told them five years ago that instead of standing at the curb with their hand in the air they would soon tap a button on their smartphone to geolocate a nearby car, and then simply exit the car at the end of the ride. I also tell them that they may think I’m crazy now for telling them that soon that car won’t have a driver behind the wheel, but Uber is already working on that right now.

This on-demand seamless delivery is raising the bar for customer expectations in banking, and so is the Uber payment experience. To me the best part of the Uber payment experience is that there isn’t one. I don’t want a payment experience, I want a ride from point A to point B. It’s a great example of the “disappearance of payments” that payments expert Ginger Schmeltzer talked about at the Fintech Stage at the BAI Beacon conference in Chicago last month.

How can a bank improve on that?

Lauren Liss, Senior Director of Digital Partnerships, Card at Capital One gave me a deeper look at how the bank is working with Uber to simplify life for their customers. In June 2016, they announced their partnership to create Uber’s first ever in-app loyalty experience: every 10^th Uber ride was free when customers paid with a Quicksilver or QuicksilverOne card, through March, 2017. Then, earlier this month two companies announced they were evolving the offer to make it even more valuable for customers. As of November 1, customers get $15 in Uber credits – instead of a free ride (valued at up to $15) – every time they pay for 9 rides with a Quicksilver card through March 31, 2017. Unlike the previously earned free ride tokens, the $15 Uber credits can be used on multiple rides at any time through April 30, 2017.

The two companies have worked together since April 2015, and Liss says the relationship makes sense because of their shared focus on providing savings and convenience.

“To me, the best part about our partnership with Uber is that we’re able to create experiences for our customers that are simple and help them save.” says Liss, “This year we’ve created – and improved on – a valuable offer that comes with a clean user experience, created based on customer feedback.

Liss said her team is focused on creating solutions that simplify life for their customers, so embedding a loyalty experience into the Uber app – and then improving on it – helps deliver on those goals.

For more on how technology, innovation, and design are being leveraged to create a better banking experience, read my related interviews and listen to my podcasts with Capital One’s Global Head of Design Scott Zimmer, their head of digital Tom Poole, and their head of platform and developer community Naveed Anwar.

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Thanks to Capital One for sponsoring these posts and podcasts and for providing access to their team, but all of the opinions expressed are still mine, all mine. For more information about Capital One, visit www.CapitalOne.com

Banking on Blockchain

November 9, 2016 by JP Nicols

Last week I attended an IBM blockchain discussion at Rise New York, featuring Jalak Jobanputra, Founder and Managing Partner of Future\Perfect Ventures and Brigid McDermott, Vice President of Blockchain Business Development & Ecosystem for IBM, and moderated by Todd Pruzan, Editorial Director for Ogilvy.

You can catch the video of the event here, and also see my live tweet stream from the event here.

Blockchain technology has been at the most dizzying heights of the hype curve of fintech pundits for the past year or two, and while it may not quite fulfill all of the fantastic dreams that its most fervent zealots claim, it truly is transformational technology, and it’s time for even the most technophobic bankers to pay attention.

This is not a technical monograph on blockchain. If you want to dig deeper, I encourage you to read more from my brilliant friends Chris Skinner, Dave Birch, or Simon Taylor, or at least listen to our blockchain series on the Breaking Banks podcast, featuring all three of them, plus many other experts.

The concept of a blockchain—literally chaining blocks of data to one another— results in a distributed database or ledger system where all participants have transparent access to one true version of the data. This decentralized consensus creates trust without the need for a central administrator. Contrast this to multiple parties maintaining their own separate ledgers with everyone logging their own view of additions, subtractions and transfers.

The first blockchain was used as the basis for the bitcoin network starting in 2009, serving as a public ledger for all transactions. Over the last couple of years many new use cases have been envisioned outside of cryptocurrencies, and the panelists mentioned some on stage that reach beyond financial services.

Blockchain Beyond Banking

Jobanputra says the current state of blockchain is somewhat analogous to the early days of the internet, and she sees opportunities for leapfrogging current technologies, especially in emerging markets. Mobile phones grew quickly in many emerging markets, leapfrogging the need for expensive infrastructure of landlines, and enabling financial innovation such as M-pesa for mobile payments in Kenya. Her firm Future\Perfect Ventures has investments in several blockchain companies, including BitPesa, which is blockchain-powered payment network in Africa.

IBM’s McDermott also sees blockchain as a way to reduce infrastructure and transaction costs and eliminate middlemen that create barriers to entry for individuals and smaller firms in both emerging and developed markets. In particular, she sees a huge opportunity in supply chain management— “getting the right goods to the right place at the right time”, which she says, touches everything in our lives.

Beyond providing greater transparency and visibility on shipments that can help reduce $600 billion of fraud global trade every year, blockchain can also reduce the high cost of sending confirming documents. Even more exciting to the panelists is the ability to link the blockchain to other technology, such as self-enforcing “smart contracts”, and cognitive computing to provide powerful analytics for things like demand forecasting. McDermott thinks this is where IBM’s enterprise approach to blockchain gives them a competitive advantage.

Banking on Blockchain

Yet, as blockchain spreads outside of financial services, it also brings it right back. Trade clearing and settlement are the areas most often cited as a prime opportunity for blockchain use in financial services, but payments, trade finance, currency settlement and lending applications are picking up steam too.

This democratization of the ecosystem is another threat to the traditional gatekeeper model of financial institutions, but it also offers a transformational opportunity for those that can think beyond reducing costs and improving transactional efficiency.

“Just ‘blockchainizing’ current processes very much limits the potential of what blockchain can do.” Says McDermott, “Where blockchain is going to be really valuable is where it helps transform the process, not just changing the technology of an existing process”.

McDermott also says she has to now think in “blockchain years”, where things expected to take a couple of years are now taking a couple of months. We are seeing this with financial institutions adopting blockchain technology dramatically faster than initially expected. IBM recently reported that 15% of top global banks intend to roll out “full-scale, commercial blockchain products in 2017”, and that 65% of banks are expected to have some sort of blockchain project in the works within the next three years.

William Gibson is more right today than ever: “The future is already here, it’s just not widely distributed yet”.

Thanks to IBM for sponsoring this post and my live-tweeting of their event, but all opinions expressed are still mine, all mine. For more information on IBM’s work on blockchain, visit IBM.com/blockchain.

Building Better Bank-Fintech Partnerships

November 7, 2016 by JP Nicols

Talk of banks and fintech companies partnering together has increased dramatically in the past year. There have definitely been some interesting partnerships announced, particularly with some of the marketplace lenders, various blockchain projects and some artificial intelligence driven bots. Most are in stages that are too early for a full analysis at this point.

There has also been a lot of hype and a lot of misunderstanding from both sides. Too many fintechs have a feature or technical capability but don’t really understand what problem they’re solving for whom or what it will take to make it work within banks’ highly regulated environment. And too many banks think that they are “already partnering with fintechs” because they have a few technology vendors and a procurement department. In short, most of them might as well be on different planets.

I sat down with Naveed Anwar who runs Capital One’s developer community and partnerships and integrations, as a part of the Invested in Tech blog and podcast series with Capital One to look at how things are going at DevExchange, the developer community that the bank announced last spring at SXSW.

Anwar sees DevExchange as an opportunity for both internal and external innovators to co-create new experiences, and he sees it as a groundbreaking opportunity in what Ron Shevlin calls the “platformification” of banking. Anwar thinks that a “platform mindset” is necessary for staying relevant, and that the bank alone cannot create all of the experiences that their customers want and need.

“There’s a platform transformation taking place in the industry”, says Anwar, “and we’re in the midst of it.”

Opening up APIs to outside software developers facilitates much of that co-creation and collaboration. APIs (application programming interfaces) are pretty basic technology for developers, even if they represent new vernacular for the average banker. APIs offer a set of well-defined standards that allow different kinds of software to talk to one another and build on each other. Think about how Google Maps often show up inside of other apps as an example. Google shares its Maps API with outside developers because it creates a win-win for both sides. Other apps gain the detailed functionality of Google maps without having to build it all from scratch, and Google gets more users and data.

Currently there are three APIs shared on the DevExchange platform:

Credit Offers, which returns a personalized list of Capital One credit card offers.
Swift ID, which is a two-factor authentication that gives customers a secure way to approve access requests for confidential information.
Rewards, which offers information on miles, points or cash rewards earned.

DevExchange is still in Beta, so Anwar and his team are planning to release additional APIs in the future. He says they are learning a lot from both customers and developers in the Beta, and one of the things that came out of it was a co-creation with the ride-sharing app Uber that gives certain Capital One credit card holders a $15 credit after every time they have paid for 9 rides with the card, through March 2017.

Co-creation is about a two-way conversation, says Anwar, “It’s not about us pushing our stuff on to them, without listening to them. If you don’t listen to your community, you will be irrelevant”. It’s also about making the tools easy to use, and Anwar says that developers can be set up on the platform in less than two minutes.

Anwar’s goal is to make the process frictionless for developers, but it takes a lot of work to make things look easy: “Building and sustaining a platform mindset requires a lot of patience. It’s not a transformation that takes place overnight.”

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Improving the Consumer Payment Experience

November 1, 2016 by JP Nicols

I’m continuing my look behind the scenes at Capital One to see how they are using technology, innovation, and design to create a better banking experience. Last week at Money20/20, I spent some time with Tom Poole, Managing Vice President for Digital at Capital One.

I heard Tom speak on a panel called “The Role of Mobile Wallets in Streamlining Online and Mobile App Payments” at the conference, and I asked him afterward about his comments in the panel. I also recorded the interview for a Breaking Banks podcast.

Poole sees three types of mobile wallets. First, are the kinds from tech giants that are focused on paying at the point of sale and leverage the capabilities of their device, such as Apple Pay and Android Pay. Second are those from merchants that focus on their loyalty programs, such as Starbucks.

Finally, there are mobile wallets from banks, and Poole thinks banks have unique advantages in information and control. The bank authorizes the transaction, so they are the first to know when a transaction was approved, what it was for, who it was with, etc. That information can be leveraged to notify the customer on duplicate charges, or if a recurring charge jumped 50% from the month before, or that a trial period expired and they are now paying a recurring monthly fee, and so on.

There is a lot of buzz in the industry about making payments “frictionless”, but that’s not always a good thing. “Everybody wants to carve out steps that feel unnecessary or not value adding to the payment,” he says, but “there are times when friction is a good thing. Sometimes I need to be told that I’m about to pay for something that would completely be off of my radar screen.”

In fact, customers like certain kinds of “friction”, like notifications that give them knowledge and insights about where their money is going. “It appalls anybody paying five dollars for a subscription to a website they’re no longer using and don’t have need for.”

Poole says that the great thing about the customer experience in payments is that none of it is about the payment, it’s all about the information and experience that surrounds that payment. So his team is focused on making sure customers get the right information at the right time to make better decisions, and they work to bring in resources to help them save money and save time.

Tom Poole, Managing Vice President for Digital at Capital One

Many of the themes around experience design and a Test and Learn culture that come up in my interview with Scott Zimmer, Capital One’s Global Head of Design, also came up with Tom Poole. He described their user labs inside their buildings, and how his team uses them to find out how customers actually interact their products, sometimes finding that some of their “great ideas” turn out not to resonate with customers.

They use low fidelity prototypes and mockups to get more honest reactions from users. Customers often don’t want to insult the feelings of the team if they are presented with something very done and polished that obviously took a lot of work. Even with that amount of preparation, it still might be the wrong experience, so they pay a lot of attention to how real customers are reacting to finished products too.

Poole described an example where customers thought a “Tap to Pay” button on their mobile wallet app was broken because it took them over to Apple Pay. It turned out that they were looking for full bill pay functionality behind that button. So the team relabeled the button to read “Apple Pay”, and now the button did exactly what customers were expecting.

This insight also caused the team to add a link to bill pay, which was in the Capital One main banking app, a feature that they originally had no idea that customers would want in the mobile wallet app. “Two sources of customer frustration gone,” Poole continued, “but it took a lot of fine tuning to realize exactly that consumer expectations about what the app would do, and what we as designers thought it should do, were totally different.”

Even with all of that effort, customer experience and service design are still more art than science. As Tom Poole put it, “There are a thousand ways to mess up a feature, and really only one or two to get it exactly right”.

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Designing a Better Banking Experience

October 27, 2016 by JP Nicols

designing-a-better-banking-experience

This week at Money20/20 in Las Vegas I spent some time behind the scenes at Capital One to see how they are using technology, innovation, and design to create a better banking experience.

I sat down with Scott Zimmer, Capital One’s Global Head of Design, to focus on how design is taking on a growing role in banking. He describes himself as a “Disney-bred creative, someone who’s driven to create”. Not exactly a common bio quote for most bankers, but one that may grow more familiar as design takes an increasingly important role in the industry.

“There’s a pretty compelling story in banking, and the things we do for people matter to people on a human level,” says Zimmer, “and in the design community, that’s what designers were born to do.”

Listen to the interview here:

Design is about a lot more than making things look pretty. It’s about making things work better. Technology has been a democratizing force across so many industries, and banking is no exception. Customers have more choices than ever, and those choices now include products, services and experiences that are often far superior than the you’ll-take-what-we-make era that prevailed for so long.

I have heard a lot of bankers proclaim their desire to make their branches more like Apple stores, but for too many of them that desire begins and ends with the clean visual aesthetic. The effectiveness of the design of the Apple store that makes it so successful goes far deeper than that. Zimmer agrees, “Steve (Jobs) was famous for saying ‘design is really how something works’, and what’s interesting about the Apple store in all its starkness, is they simplified it, to make it work better.”

The business case for beautiful products and compelling customer experiences is a tough one for most boards and executives to get their hands around. I know this firsthand from my work helping some of them with their strategic planning, as they fret about making big bets that might not payoff. A good design process involves a ‘test and learn’ approach that is well known to any fintech entrepreneurs following lean startup principles. It’s an approach that banks should be using in more of their business decisions.

As Zimmer puts it: “We try to avoid failing at scale”

Scott Zimmer – Global Head of Design, Capital One

Las Vegas is an appropriate setting for using a poker analogy to describe the advantages of this approach (blackjack works too). Rather than pushing all of their chips to the center of the table and declaring “all in” as the first cards are dealt, the savvy player makes small bets and only increases them until the cards are in their favor.

“It’s the thing that has transitioned product development dramatically”, says Zimmer, “in days past you might have made two, three big bets a year, and now, any team that’s working in this collaborative, iterative fashion can be making sixty, seventy bets at one time, but with minimal investment.”

Zimmer and his team have brought this iterative test and learn approach inside the organization too. They’ve built user labs to test ideas with customers much earlier, and this gives them better insights into what’s working and what’s not much sooner. He contrasts that approach with the typical big meeting going over a PowerPoint presentation that someone has worked on internally for weeks. That approach can cause teams to be defensive about their hard work instead of working through the options more collaboratively with more early contact with customers.

The future of design is evolving beyond spaces, products and services. Zimmer also talked about the challenge of designing for voice with the Capital One skill for Amazon Echo, with a team focused on conversation design “obsessing around the humanity that has to come through in an interaction and what the word choices are”. That work is continuing with the release of an update to the skill called “How Much Did I Spend?” that was built with a natural language query, “as though you are talking with your money”.

Zimmer sees parallels between financial health and physical health, and he thinks software and good design can help us to set goals and achieve them. “The ability to leverage software’s capability to do that is this new era that’s upon us of creating new products and services. I think design plays a huge role, and there’s a bright future ahead.”

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Fear and Coding in Las Vegas

October 23, 2016 by JP Nicols

fear-and-coding

Like so many of the the fintech flock, I am about to make my annual Fall migration to Las Vegas for the Money20/20 conference. I am looking ahead to what I hope to see there, which is how fintech is becoming more and more embedded into customer experiences and customer expectations, and how financial institutions are using fintech as a differentiator. The Capgemini/EFMA World Retail Banking Report surveyed 14,000 consumers worldwide and found that nearly two-thirds said they were the customer of at least one fintech company.

I am also reflecting back on the other banking and fintech events that I’ve been to over the last couple of months— Finovate and Next Money in New York, Sibos in Geneva, BAI Beacon and the Fintech Stage in Chicago, and keynoting at three different banking conferences with groups from Massachusetts, Missouri, and half the country with the Federal Home Loan Bank of Des Moines. Plus scores of private meetings with bank and fintech executives along the way.

Besides a digital wallet full of frequent flyer miles and a backpack full of Hudson News and Cinnabon sales receipts for my accountant, the main thing that I picked up in my travels is that my industry innovation maturity map of Leaders, Learners and Laggards is evolving, but still valid.

Leaders, Learners and Laggards Revisited

When I developed the maturity map a coupIe of years ago, I defined financial institutions that were Innovation Leaders as those that prioritize innovation as a necessary business activity and support it top-down, bottom-up, inside-out and outside-in. At this stage of evolution I am seeing another difference from Leaders. They also see fintech as a force for redefining business models and improving customer experience.

The small group of Learners in the middle is growing bigger, as more banks are realizing the need to keep up in this era of digital disruption. The same Capgemini/EFMA report also surveyed 140 industry executives around the world and found that 90% of banking executives believe that the pace of change is increasing the need to innovate, and 65.3% said that they viewed fintech firms as potential partners.

I have talked with a lot of Learners over the past few months, and they definitely see the potential for partnering with fintech firms, but they are are finding it challenging to see results quickly, partially because bankers and fintech entrepreneurs seem to come from different planets. They also continue to be challenged in finding the necessary internal resources and expertise since many cannot afford dedicated full-time innovation teams. Most are trying to make due with what I call “And-I’s”, employees with the words “and innovation” tacked onto their existing job title and full time job duties.

My original definition of Laggards was primarily marked by ignorance; executive teams operating with tunnel vision around a narrow definition of competition limited to just their peer group of similar institutions. My recent experiences and conversations tell me that ignorance is now supplemented with an unhealthy dose of denial as they begin to negotiate their own fintech grief cycle.

Laggards think they are “partnering with fintechs” because they have a few technology vendors and a procurement process. They also are much more likely to view fintech as merely opportunities to reduce costs, rather than also the ability to drive better customer experiences.

Spotlight on Capital One

I’ll be talking to a lot of financial institutions and fintechs this week at Money20/20, but I will be spending some extra time with some of the Leaders at Capital One. In upcoming posts I will interview Tom Poole, Managing Vice President of Mobile Commerce for Capital One about mobile payments and integrated commerce, and Naveed Anwar, their Managing Vice President for Platform, Strategic Integrations & Community about the “platformification” of banking and how they are working with fintechs.

I will also be recording these interviews for special episodes of Breaking Banks, the world’s first global fintech podcast. By the way, it was recently announced that Breaking Banks is now the number one business show on the VoiceAmerica network, with over 2.2 million total listeners in over 100 countries.

So follow along as I report this week from Money20/20 in Las Vegas.

Thanks to Capital One for sponsoring these posts and podcasts and for providing access to their team, but all of the opinions expressed are still mine, all mine. To learn more about Capital One, visit www.CapitalOne.com.

Bankers Are From Mars…

September 6, 2016 by JP Nicols

It is not news here, or anywhere else, but bankers and fintech entrepreneurs are from different planets.

They are just wired differently.

Just a few years ago, all of the fintech companies wanted to put traditional financial institutions out of business. Disrupt the industry!, they said.

Despite the fact that we still have over 6,000 banks in the U.S. alone, plus a similar number of credit unions, the industry has been disrupted. But acquiring new customers at scale is hard for fintechs, and now the talk is about the value of fintechs partnering with financial institutions, instead of trying to put them out of business.

That’s not necessarily any easier, it’s just a different kind of hard.

Many have focused on technology integration, getting new apps and systems to work with banks’ aging technology infrastructure. The technology-driven nature of many new innovations makes this necessary, but it is not sufficient.

Successful partnerships between fintech companies and financial institutions need go beyond technology integration to address these three elements:

The Three C’s of Bank/Fintech Partnerships

Cost

Building out an internal innovation team is not cheap. That’s why so few FIs have them, and why an increasing number are adding what I call “And-I’s“– employees with “and Innovation” tacked on as an additional responsibility to their existing job titles.

Banks and credit unions are recognizing the increasingly urgent need to update their products and processes to stay relevant with their customers and members, but searching for, evaluating, and vetting potential partners takes a lot of time and money too.

Often overlooked though is the cost of an inefficient innovation process carried out part-time by inexperienced people. Common traps include devoting too much time to planning and defining user requirements, and not enough time actually testing new ideas; and pursuing a random collection of “interesting” projects that do not tie into the organization’s strategic priorities.

Culture

Most senior executives at financial institutions have spent at least part of their career in a lending role, where they needed to make the right decision just about 99% of the time over the long run.

Entrepreneurs experiment with new ideas with an aim to fail fast and fail cheaply, because each iteration and pivot gets them closer to the right answer in the market. The venture capitalists investing in these companies know that close to half (or more) of them will fail.

Most banks and credit unions are not going to be leaders in product innovation, so partnering with more nimble fintech companies makes sense.

But partnering takes more than simple introductions between two different parties with vastly different approaches.

Successful partnership requires FIs to address their own culture to create space inside their own organizations that embraces change. Fintech companies need to understand the conservative nature of their potential FI customers and adjust their sales and development processes accordingly.

Compliance

Fintech companies also need to understand that the ‘move fast and break things‘ ethos of Silicon Valley does not work inside a highly regulated environment.

Every new solution, no matter how cool the technology, has to be compliant if it is going to be used by a traditional financial institution. There is simply no other option.

At the same time, FIs need to recognize that regulation is always going to lag innovation, and they must take a more proactive approach in trying new ideas. The most innovative banks, credit unions, and fintech companies all have proactive relationships with regulators to try new ideas that will still be compliant.

Choosing to sit on the sidelines out of fear is not an effective risk management strategy.

Improving Interplanetary Relations

Yes, bankers and fintech entrpreneurs are from different planets, and I’ll leave it up to you to decide which ones have more inhabitants on Uranus.

It’s time to improve interplanetary relations. Bankers learn about the 5 C’s of credit in their first days of training, maybe it’s time they learned the 3 C’s of Fintech Partnerships.

Rise of the AND-I’s

July 19, 2016 by JP Nicols

AND-I's

Make way for the And-I’s.

And-I’s are my name for a new phenomenon I’ve noticed in financial services job titles. “And-I” stands for the words “and innovation” tacked on to the end of existing job titles. Your “Head of Digital Banking” is now “Head of Digital Banking and Innovation“.

Boom. You’re now in the innovation game. No one can accuse you of anything otherwise. It’s right there on the business card. The only thing we love more than acronyms in this business is that kind of git er done, check-the-box process efficiency.

Don’t get me wrong, I’m not saying that every bank needs a full time Chief Innovation Officer (and no one needs the trousered acronym CHINO that comes with it, but I guess we have to differentiate from our Chief Information Officers and Chief Investment Officers somehow). It’s great to recognize the need to innovate and to give someone the responsibility for making it happen. It’s just that simply tacking it on without a means of support usually does not have much of an impact.

The 3 most common types of And-I’s:

Head of Digital Banking and Innovation

The head of digital banking (who was called the head of online banking just a few years ago) has already been put in charge of digitizing an analog business model, so adding innovation to their job title seems natural.

PRO: The service delivery model of financial services has been on the front lines of the disruption wars, so an effective head of digital banking probably has a pretty good handle on understanding how customers’ needs and preferences are changing.
CON: Often times, the head of digital banking’s domain is limited to consumer retail banking, and usually just the front end of customer interactions, at that. Opportunities may be missed to create better outcomes in other business lines, drive efficiencies from back office processes, or build a sustainable culture of innovation.

Head of Technology and Innovation

The only thing worse than the incorrect and incomplete conflation that ‘innovation = technology’ is its even more misguided cousin, ‘technology = innovation’, even though the two do often co-exist as a matter of necessity.

PRO: A senior technologist who understands how to make things work inside the complex machinery of a bank is definitely a great person to have thinking about implementing better ways of doing things.
CON: Senior technology leaders are under a lot of (understandable) pressure to keep all of the systems running smoothly and reliably, and to continually seek out and destroy any potential security threats. It’s hard to ask that person to spend a lot of time building and testing new concepts with regularity.

Executive Vice President of X and Innovation

If a board and/or CEO have decided that innovation is indeed an act of leadership, they may want to vest a member of the senior leadership team with newly minted innovation powers.

PRO: Any innovation efforts without a serious commitment from senior leadership is doomed to fail. Having someone with the ear of the CEO and board and a direct say in the budgeting process is a good thing.
CON: Even if the appointed senior officer isn’t the type who needs their granddaughter to help them figure out all of those apps on their new iPhone, all of that experience of the grizzled veterans can actually work against them in the innovation process. The pursuit of perfecting best practices can get in the way of discovering the next practices.

The Case for And-I’s

Hiring people with a full time focus on innovation is an expense that most banks cannot afford. The cost of a full-time, senior level Chief Innovation Officer, plus a team of supporting researchers, designers, and technologists can easily be a million dollar a year investment (or more). Plus hoodies. You can’t forget hoodies.
Infusing an imperative to innovate into everyone’s psyche and their job description is a hallmark of the most innovative companies in the world. It shouldn’t be reserved for an anointed few.
Far-flung R&D labs and skunkworks activities disconnected from the core business and its practitioners can be a rabbit hole of unproductive navel-gazing.

How to Make it Work

Use all of these people as a team, plus a few others (just none of these people), to help you build out your innovation team. But put someone in charge. Even if it’s part time, someone has to be the leader of your innovation efforts.
Establish innovation goals. What are the business goals you are trying to achieve? (See: 5 New Years Resolutions for Bank Innovators.)
Create a separate innovation governance and funding structure. Innovation projects can’t be managed like typical BAU (business as usual) projects.
Have the appropriate time horizons. Your typical ROI models, J-curves and break-even analysis don’t always work well when you’re experimenting with something new. (See: 5 Ways to Kill Your Innovation Initiative)
Don’t go it alone. Get some help setting up and running your innovation program, and don’t build everything in-house. Nimble fintech companies can build and release a whole new app in the time it can take for you to assemble the committee members required to sign off its release.

Support your local And-I’s. They need all the help they can get.