Innovation is an Ideology

Fintechs and tech companies love to talk about innovation. 

“Look at this idea! It’s so innovative!”

“We want to help banks and credit unions be more innovative.”

“Innovation is key to survival.”

We started documenting our brand when our Director of Marketing, Katlynn, came on board. We obviously wanted to outline what our values as a company are. The conversation inevitably led to innovation. At which point, Katlynn basically squashed any idea we had at trotting out innovation as a value. 

Here’s the thing, while we might’ve debated it over the course of our two hour conversation that day, her argument against innovation as a value was valid. If you’re going to say you’re innovative, you have to be prepared to be on the bleeding edge of innovation. It’s a hard position to maintain. Plus, how do you demonstrate innovation? Is it as easy as adding new features to your product? Developing new products? Dismantling and completing rebuilding new processes? And let’s not forget, it’s used a lot. The last thing we want is to have financial institutions roll their eyes at us. 

Is our product innovative? Hell yeah. But sometimes, there’s more value in being subtle than beating your customers over the head with an overused buzzword. Plus, financial institutions are used to hearing about “innovation” only to realize that a product or service falls far short of expectations. 

Innovative Cultures

There’s a lot to consider from an outside branding perspective when it comes to using the word innovation. But there’s also internal considerations too. From an internal brand perspective, how do you measure innovation? When we talk to our employees about their performance, we can’t ask them how many times they innovated that month or year. Innovation isn’t an output, it’s an ideology. 

And rather than telling our employees and customers that we value being innovative, we opted for a subtler, more powerful approach: valuing the ideas behind innovation and letting those tell our story. 

What does fintech innovation actually mean?

Alright, this whole blog post might sound like a giant #humblebrag, but I don’t care. Katlynn told me to write this, so I am. 

For Steve and I, being innovative meant we had to dismantle the process of international payments. We listened to a lot of customers and because Steve doesn’t have a background in banking he asked a lot of “whys” and the answer was almost always “because it’s the way we’ve always done it”. 

If you’ve ever worked at or worked closely with a financial institution, you know that it’s not easy for them to untangle their processes. They’re dealing with a lot of data and systems that, just like anyone might expect, as time goes on, become systemized. Routine. As humans, we’re creatures of habit and it’s no different in the banking world. You create a report at the request of a coworker and continue to provide that report dutifully. When you vacate your position, your successor learns how to generate the report and provide it dutifully. This isn’t a unique challenge to banks. All businesses face this routine. The thing that does make it unique is that banks are often tied into legacy technology that inadvertently makes it difficult to change the process once it’s been established. Not only that, but banks’ plates are full trying to keep up with their customers, regulations and other changes around them. Sometimes, examining the process falls to the bottom of the to-do list. 

Asking “why” and then asking “why” again and again, until we’ve followed the thread until the end, allows us to solve the whole problem instead of just one piece of it. We’ve taken a lot of the things financial institution employees had to do previously and baked it into our process. We worked extremely hard to understand why they need to do what they’re doing and what they’re trying to accomplish. 

The key to innovation is asking a lot of questions

What does this process do for you and what’s the end goal? 

How can we provide a better process for that? 

Why do you need that?

Who cares about that?

Following this trail to the absolute end gets you to what will become an innovative solution. It’s about challenging the existing mindset and also having an inquisitive mind. The solution you end up offering should still get your customer to their end goal, but in a better way. Instead of building on top of legacy technology, look for new ways to accomplish what they need done.  

Avoid Technical Debt

Another way that fintech companies can continue to be innovative is by avoiding technical debt. Technical debit is a software development concept that implies the cost of rework based on an easier solution now instead of a solution that takes longer to implement. The more technical debt you have, the harder it is to make changes in the future. 

As fintechs, our goal should be to be the best partners possible to the FI’s we serve. This means that we’re solving the problems they face, asking the right questions and avoiding technical debt. 

Why is it important for fintechs to avoid technical debt? 

Because the financial institutions are already tied to legacy tech that makes it hard for them to make changes. If they’re going to take the time and money to invest in a fintech partnership, the best partner is one who can do the innovation for them. If, as a fintech, we’re also beholden to our technology and it’s hard to change, then we’re not the best partner solution available to financial institutions. 

How do you avoid technical debt?

Don’t solve for one customer’s problem. Look instead for solutions that will benefit the entire ecosystem. Be willing to fix issues that arise now, even if they’re going to take longer than  kicking the can down the road and going for the easier solution today. It can be a tough balance when you’re trying to get to market, prove the concept and sign your first partners. However, avoiding this technical debt and creating the right solutions for the entire ecosystem upfront allows you to remain an agile partner to the financial institutions you serve. It will elevate their experience, their customer’s experience and ultimately allow you both to remain competitive. 

Conclusion

At the end of the day, fintech partners for financial institutions add value when they elevate the customer experience and solve problems in the background. It isn’t enough to simply be a pretty front end; you have to help streamline operations, increase revenue, ease the compliance burden and give the FI something to talk about to their customers. If you aren’t doing those things, you’re simply claiming to be innovative while failing to do what you say you will for the Fi’s; a refrain they’ve heard all too often that makes them weary of partnering with fintech companies. Innovation is not an output. It isn’t something you can say you’ve done X number of times that week/month/year. Innovation is an ideology that you live up to by delivering solutions that solve real problems for financial institutions.