Some Feedback on Digital Innovation in B2C Banking

Was reading the Digital Banking Report‘s latest look on retail banking innovation.  I pay attention to the B2C side even though we only invest in the B2B side.  B2C sometimes informs B2B.  Sometimes businesses startup as B2C, and pivot to B2B or vice versa.
Here are the key takeaways from the B2C side of digital banking in the report.
• The percentage of institutions with a clearly defined innovation strategy
dropped significantly from previous years. This is attributed to the inclusion
of a greater diversity in organization sizes this year.
• Organizations continue to increase investment in innovation strategies in all
functional areas.
• Digitizing products and services, the customer journey and security were
the top three areas where organizations are focusing digital transformation
• The top innovation challenge is systems integration and legacy
• Organizations expect to see a measurable return from their investment in
innovation in 1-3 years.
• Large tech companies, challenger banks and smaller fintech start-ups were
considered to be the biggest threat to disruption.
• The greatest threat to banking products was expected to be in the areas of
payments and mobile wallets.
• Technology investment is being made in ‘old’ technology as opposed to
‘new’ technologies.
• Fewer than 50% of organizations had plans to deploy RPA solutions, while
70% of organizations planned to support a conversational AI solution.
• Just over 15% of organizations can prescribe what a customer should do in
the future, with 20% having predictive capabilities.
• The quest for expertise in advanced technology and analytics is increasing
When you think about innovation in banking, you have to remember bankers are inherently risk-averse.  However, they know that there is a lot of innovation out there they should use. The problem for them is to figure out how to adapt it to their business.
If you walk into a bank and tell them you can do artificial intelligence, they will think it’s cool but don’t know where they should use it.  I am reminded of a tech company that went to sell a product to manufacturers. They brought their product in and showed it to design engineers.  Clearly, it was the best and most cutting-edge product in the market.  Engineers were wowed.  The company could do anything with the product the engineers wanted.  Being naturally curious, the engineers wanted to see more and more bells and whistles.  But, they never bought.
Contrast that to the development of the iPod at Apple.  It was streamlined and focused.  It wasn’t until later that you could get various sizes, colors and options.
When you sell to a bank, be very tightly focused.  The initial sale will be to solve one headache they are having.  It’s also important in this day and age to have a small tech lift inside the company.  Banks aren’t in the mood to rip up entire tech stacks.  Once you are inside, the company might be able to land and expand.