Digital transformation in financial services: this is just the beginning

25 July 2019
Author: FINTECH Circle team

Digital transformation is not a simple process and something most banks struggle with nowadays. Any plan to transform must combine multiple touch points, intermediary goals, striving towards creating an ecosystem of hyper-connectivity between outside players and inside teams, whilst connecting data from various systems and collaborating with other stakeholders.

On 9 July 2019 Heads of Innovation and Digital Transformation from leading banks such as HSBC, Barclays, Morgan Stanley, Societe Generale, Deutsche Bank and JP Morgan to name a few, met up for an insightful morning roundtable, hosted by FINTECH Circle and Allen & Overy in London. The topic of the roundtable was Enterprise Innovation and the current trends in financial institutions.

The open discussion started off with the analysis of transformation roadmaps and the challenges the departments face on a daily basis. Difficult topics to solve for many delegates as the innovation units within financial services companies are still not perfectly organised so they sometimes find it challenging to drive the ideas and progress forward.

The question is: if you have an innovation lab, how do you make it a part of your core development? Ideas are there, but the difficult part starts when trying to execute them.

What all delegates agreed on is that it’s important to have internal supporters, sponsors, and resilience – people who are leading within the company and will be your advocates. There’s a need to go outside and learn more how the industry is unfolding. This is the best way to “get the stuff done”. It’s not so much about what is getting implemented, but rather who is your sponsor and how much drive they have to implement the transformation. It’s about pushing for cultural change and providing a platform for different units within the business to work together focused on a joint goal.

Innovation labs

We’ve noticed in the past years that financial institutions are trying to implement changes through Innovation labs, setting them up to identify what every business area in the organisation is strategically looking for and how to bridge the gap between the traditional way of working within banks and connecting to the fintech sector. These labs build up a team of innovators that support internal projects – legal advisors, compliance, and project managers to drive things forward.


William Samengo-Turner, Allen & Overy and Susanne Chishti, FINTECH Circle

The issue with big financial organisations is that too often budgets are set up hierarchically and allocated to specific things. So if a great idea comes around in the middle of the year, they will have to wait for realisation until next year, when new budgets are allocated. So having a yearly budget cycle process is not appropriate any more if it stops business units from focusing on better opportunities during the course of the year.

The main result budget holders wish to see is return on their investment and success within the timeframe promised. This can be challenging as success isn’t always visible straight away and can be different than the imposed KPIs.

Working with stakeholders

Delegates also discussed when to involve certain stakeholders into the innovation lifecycle process. Some were in favour of involving the CIOs gradually in the process, whilst others think including the CIO team too early, can kill the process, while others commented that bring them in too late risks that the inhouse IT teams haven’t got much time to finish the project. At the end of the day, all innovation presents risks, but not innovating is an even bigger risk. The delegates also debated on how you create a sandbox with clear boundaries, without limiting the innovation.

Collaboration with startups

We’ve touched on the topic of working with external startups – buy vs. build, licensing, co-creation and collaboration. Most banks prefer to hire fintech companies as suppliers and partners initially after a successful POC has been completed. In terms of Corporate Venturing, few banks buy fintech companies outright with a fresh outlook on the business and their innovation projects. Most CVC prefer to take minority stakes in fintechs, co-investing with other institutional investors, and surprisingly none of our delegates had set up a joint venture in the past.

Another indirect access to fintech companies in the past was to sponsor fintech accelerators who received a minority stake in the companies selected for the cohort. While banks don’t sit on the board as there is no capacity for that at the moment, the bank still receives the positive input from the startup. The important thing here is (again) sponsorship from high in the organization.

Talent management

Important subject is talent management and how to upskill employees for the digital age, which are the new skills required and how to best train teams – in person, online or through blended programmes?

Most delegates see the problem in promoting the change and make teams want to upskill as not many people actually like change. Part of being a Head of Innovation is uncovering individuals and teams that are not innovators and create an environment to attract the best people that have the right mindset.

Digital transformation: this is just the beginning

We concluded that digital transformation across financial services has just started as it is very challenging to innovate in most organization structures of banks today. However, everybody agreed that there is a strong urgency to improve the customer experience across retail and corporate banking and to invest in people, technology and cultural change to successfully compete long-term.

During the roundtable, FINTECH Circle and its partner KnowledgeBrief announced the launch of a new innovative course: Management and Leadership Programme with a Fintech and Digital Transformation Specialism. The programme with an innovative approach is designed for finance professionals, helping them excel as 21st century leaders in financial institutions undergoing digital transformation. Find out more about the programme.

FINTECH Circle is a global platform of more than 120,000 fintech entrepreneurs, investors, finance professionals, academics, and solution providers. We run Europe’s 1st Fintech Angel Network and provide bespoke corporate innovation programs, thought-provoking events, and FinTech Masterclasses for leading financial institutions world-wide.