Money20/20 Europe dives deep into three debates that continue in boardrooms across Europe around the subject of cultural innovation, technology innovation and external innovation.

This year, the Amsterdam-based event gets into the core of what it means to innovate, what measurements can be used to benchmark what’s being done and unleash the financial industry’s next seismic shift.

Kicking off session on the Innovation Catalysis stage, Philip Clarke, founder, managing partner of HUNCH explores how despite 10 years of the democratisation of innovation, we not have “more apps, more hacks and more labs. Despite that, there has been some amazing transformation, but it has all been done by entrepreneurs, not financial services. Radical reinvention is what is required.”

RIP innovation

Somewhat summoning that death of innovation (and £400 beanbags), David Brear, CEO of 11:FS, highlights how although claiming to be innovative, financial services institutions and fintech startups are not delivering anything different; “innovation has become theatre. Digital banking is only 1% finished."

Brear goes on to explain that digital has just become a distribution point for analogue products and the attitude is one with the sentiment that there is no need to move forward beyond digitisation, but as Brear points out, there is much more to deliver. After questioning the audience on if there are any differences between banking now and in 1990, he highlights that almost nothing has changed, and the sadder reality is, £250 billion was spent on “innovation.”

Customers don’t care about these incremental changes to infrastructure and interfaces and “being consumers of the planet, they are painfully aware that financial services is being left behind.”

Brear continues: “Digitisation is being sold to people as the solution to fixing their problem,” and explains that it all started with branch banking, the paper and human model. This model was then digitised into internet banking, “which lost all humanity, warmth and 30% of functionality. Then came mobile banking; Brear asks whether a smaller screen and less functionality is really innovation?

While the financial industry can learn from other sectors such as the news and music industries, Brear points to how there has been a shift in benchmarking success, as before “the number of customers was the arbiter of success.” Alongside this, “Big Techs continue to be a looming threat and never admit to being on the banking battlefield. They have more customers and brands that people like. And it’s a killer when your customers don’t like you.

“This is not a love letter to fintech,” Brear states, but does advocate partnerships - there is 99% of digital banking left, after all. “Innovate is a dumb term. People do innovation for innovation’s sake. It is not about innovation, it’s about execution.”

Benchmarking innovation

This transformation from digitisation to digital continues to be discussed in the next panel session, where Josh Bottomley, global head of digital, data & development at HSBC, explains that at first, you need to decide which customer problems are you trying to solve, but this is difficult when “everyone thinks they’ve cracked it.”

Ginger Baker, senior director, product at Ripple, riffs on this point and says that innovation is about delivering after envisioning what you want your business to be in the future. “It’s about execution,” referring to Brear’s earlier point.

Bottomley continues: “Creating a development pipeline with regulation in mind is difficult, because one of the biggest challenges is the ability to manage ongoing challenges to regulatory processes. How do you get better at regulatory processes?”

Mastercard president, new payments platforms, Paul Stoddart highlights that banks have to try different approaches, but another problem also arises in the career life of someone with innovation in their title. “They don’t last long because the organisation within which they are expected to thrive is not ready and not conducive to the ideas that they bring.” He also makes a point on labs and benefits of partnering with fintechs, because then the innovation team is separate from the organisation.

Bottomley says that “there is not shortage of ideas,” but teams should not be put together to add features to existing products, “that’s not the heart of this multi-trillion dollar industry.” He explains that customers will continue to spend more on a credit card they can’t pay back later and will be persuaded by someone online that the latest cryptocurrency is the best investment for a pension. But how can banks help customers behave in such a way that truly prepares them for the long-term?

However, as Baker suggests, if there was a culture of innovation in place, processes would have been disrupted by now.

The playbook

Ruby Nimkar, principal at Greenhouse Capital, picks up on Brear’s point and says that innovation is quickly becoming an overused and distorted word, while banks are rebranding themselves as technology company.

She asks: how do you launch this seismic shift? How can incumbents tap into tech transform? How do we collaborate, rather than compete? Do incumbents start looking into create entirely new subsidiaries? Can cultural change be a catalyst for cultural change? Benoit Legrand, chief innovation officer at ING takes to the stage to answer all these questions.

But first, what is innovation? “Innovation is a mindset, not to promote yourself as an innovation manager but to bring value to the company by obsessing over the customer. It’s important to connect to the environment, be open and put the customer at the centre of everything,” Legrand says.

Focusing on culture, Legrand says that it is not about the technology, it is about the people. “As humans, we do not like change. We want everyone else to change, but not us, because we’re perfect.” Legrand then describes his Innovation Power model, which includes psychological safety, flexibility, pragmatism and leadership, but all these only work with each other dependant on the complexity of the organisation.

In addition to this, as the future is unpredictable, Legrand explains that humility, determination and perseverance is also needed. “You need courage to go against the trends.”