Fintech on Friday: Why it takes blood, sweat and tears to foster an innovative mindset

One of the oft repeated assertions made about the digital revolution is that just as technology makes certain jobs redundant, new roles will also be created.

Chief innovation officer is a title you didn’t hear much until a few years ago. But now it seems most banks have one on board.

But just having appointed someone to this role is no guarantee a firm is moving in the right direction, says Benoit Legrand, ING’s chief innovation officer.

“The problem with the role of innovation officer is if it is part of a trend. If it is just something you are doing for marketing or branding purposes, then you are wrong.”

Mr Legrand took up the post in October 2015. “I think the reason I was asked by the CEO to do this is because I have a background in retail banking, private banking, investment banking, direct banking, and have worked in five different countries. It helps me to understand a wide variety of business issues,” he claims.

So what exactly is ‘innovation’? Mr Legrand claims it is a mindset which needs to spread throughout an organisation in order to build a sustainable future for a company. The key is  basing it on what customers are demanding and expecting, and not on what the firm itself would like to do.

This is far from easy. “As Churchill would have said, it takes a lot of blood, toil, tears and sweat. We are changing things and people do not like change.”

In order for a bank, or any other company for that matter, to change, it is absolutely vital that senior management is on board, insists Mr Legrand.

“We have innovation boot camps and so on, but the reality of life is that unless innovation is a priority for the CEO, it will not be a priority of the management board, which means it won’t be one for senior leaders, and it doesn’t filter down.”

Mr Legrand explains how at the Dutch Bank, in addition to the usual questions about annual performance, the CEO also asks managers what they have done to make ING the best bank in the next five to 10 years. “Asking those questions, and rewarding accordingly, gives everyone a different mindset,” he claims.

Yet there is still resistance the change which can be hard to overcome. Individuals are quick to pour scorn on products and partnerships from outside the company, to claim similar initiatives have failed in the past, or simply will not work, and, of course, they fear for their jobs.

“Of course this puts people’s jobs at risk,” admits Mr Legrand. “If someone tells you there will be more people working in financial services in 10 years’ time, either he is lying, or he is flying somewhere close to the moon.”

There will also be different people working at the firm, he says, as external recruitment is important to address skills shortages.

“But if you do this correctly, you are also able to redirect people, and skills, and train them to do something different. Not everyone will make it, and you will need to recruit new people, but some will transition.”

And it is important to realise that innovation is nothing to do with age. “It is a mindset. You see people in their fifties who are pushing innovation, and others in their thirties who resist it.”

Forming partnerships with external providers is absolutely central to the ING model, with the firm having forged 160 of these with fintechs.

“Before we start something we ask is there anyone out there who is smarter than us in this? Has someone already done this and can we buy if from them?”

This is not always popular internally, he admits. “For every partnership we have with a fintech, I am confronted with the following reaction: ‘We can do this ourselves.’ I always say, yes you can, but the difference is that those guys have already done it.”

The successful marriage of human relationships and digital technology will be at the heart of successful financial services firms going forward, believes Mr Legrand.

“Innovation is about people. Anyone can build an app, but there are different ways to do it. Do you make it simple or complicated, paid or free? People decide these things. And those 'little' things make the difference.”

The importance of AI and digital to financial services will continue to grow, he predicts, but banks should be doing just as much to boost “human relationships” with customers.

“You need to be excellent at both. The bridge between the two will be what differentiates banks from one another.”