Challenges for investment banks 2017 (Part 8): Getting Innovation Right

Beat Monnerat, Senior Managing Director of Financial Services for Asia Pacific; Owen Jelf, Senior Managing Director for Capital Markets; Accenture

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

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Investment banks are experienced early adopters of new technologies - from data-centre virtualisation to in-memory computing and algorithmic trading firms have adapted complex technologies. When done right, these innovations have brought important capabilities to clients and the capital markets. Now new financial technology (fintech) offers further opportunities, but only if banking leaders develop a holistic framework, which is built on a cohesive innovation architecture and one that relies on partnerships.

Accenture analysis based on CB Insights data shows that total investment in fintech startups from 2010 to 2015 is estimated at more than $47 billion, with more than $2.6 billion in capital markets fintechs. Investment in trading fintech was roughly at $700 million. Bank's strategies surrounding fintech include venture investment, acquiring startups, building innovations in-house, collaborating via incubation labs and joint innovation.

However, there is a potential risk that companies may embark on "fintech tourism" and do not meaningfully adopt fintech as a driver for their business. Innovation requires a coherent vision and an integrated master plan.

We have seen the most impact from innovation when various digital technologies are applied in combination. For example, the power of blockchain is greatly enhanced with the adoption of cloud technologies. We therefore believe the best practice for companies is to look at the array of available digital technologies being pursued by fintech entrepreneurs and also to understand how the introduction and adoption rates are accelerating.

Therefore, companies should incorporate a fintech strategy as part of a broader vision of innovation.

A blueprint for innovation
In order to avoid the "money pit" of potentially wasted investments, we believe it is important to implement a holistic framework for evaluating, developing and adopting fintech. This includes:


  • Develop a cohesive innovation architecture: Designate a chief digital officer (or an executive with similar authority) to set a comprehensive strategy and build a framework that relies on collaboration from all innovation sources.
  •  Make a sound fintech strategy an element of this architecture: Avoid becoming a fintech tourist. Instead of always investing in the hottest, latest startups, consider a holistic adoption of fintech. Make it a driver of benefit and an inspiration for innovation across all departments.
  • Combine various technologies and build partnerships across industries: Do not view each innovation in a vacuum. Applying various digital technologies in combination makes the most impact. Partnerships between established players and startups could help build platform advances while avoiding costly build-outs.


Firms should then develop a pragmatic and aligned approach to execute, particularly considering investment dollars and management time are increasingly scarce.