Celent Round Table: When and Where Innovation Happens

Innovation is a key issue for financial institutions and a highly complex topic that demands attention when considering the business operations of tomorrow.

In light of its importance in the financial industry, Celent has planned two events in Tokyo focusing on innovation at financial institutions. The first was an innovation roundtable that was held last month. This and similar roundtables have been extremely well received in money market centers worldwide.

For the recent Tokyo event, a number of opinion leaders from Japan’s financial industry gathered to discuss and share two things: insights on effective approaches to promote innovation; perspectives of other leaders. Participants represented an array of sectors, including banks, insurers, leading brokers, dedicated online businesses, and foreign-capitalized companies. However, this diversity of participants from entities with differing business scale, history, format, and market size, shared a uniform passion when it came to their comments on innovation.

Prior to the roundtable discussion, Celent set the stage with two presentations.

The first, titled “The Search for Disruptive Innovation," took up “promoting innovation” as a theme. Specifically, it covered the reality and expectations of innovation among global financial institutions based on a Celent survey on innovation. The presentation put forth the following three points:
1) The use of ubiquitous data and breaking through traditional practices
2) Service strategies to respond to changing user expectations
3) Innovation-creating ecosystems and revision of internal rules

The second presentation, "Virtual Case Studies on Disruptive Forces," framed the technological changes and evolution witnessed since the 1970s as a new industrial revolution in a SoLoMo (social, local, and mobile) era. For the purposes of this discussion, the technologies driving disruptive innovation were categorized into three trend areas:
1) Analytic
2) Digital
3) Collaboration
Noted as common to these categories were that efforts to “respond to changing customer expectations” would drive innovation, which would be “led by firms willing to take risk.”

The subsequent lively roundtable discussion highlighted participant opinions including a range of expectations for “responding to changes the social environment,” “creating new frontiers in business,” and “shifting from continuous creation to discontinuous one.”

On the other hand, a number of factors that inhibit innovation were also mentioned, including the following: management placing priority on ROE, corporate culture that is averse to change, and enormous legacy assets. We learned two important things from some success stories introduced there: the effectiveness of initiatives by subsidiary firms which have a clear purpose and an unrelenting approach; and the importance of management that has taken innovation to heart and “made it part of the corporate DNA” to enable these initiatives to take root.

The scope of the discussion significantly transcended the prepared agenda, driving home the high expectations observers have and the vast potential see when it comes to financial innovation in Tokyo. Celent hopes that opportunities such as this that cut across the financial industry will act as a catalyst to drive the innovation at these respective firms.

Celent is committed to working with financial innovation leaders to explore the ideas that will shape financial industry of tomorrow. This discussion will be carried over and continued at events in March in Singapore and Chicago in April in New York. These will be followed by a June gathering in Tokyo that will focus further on innovation. We hope that you will continue to expect insightful things from Celent.

On Innovation

Celent held our most recent Innovation event in Singapore the last week of November, following similar events in New York, Boston, Toronto, Tokyo, London, and, most recently, San Francisco. Most of Celent’s work is focused on specific financial industry verticals, but Innovation is a topic that transcends industry barriers, and so—by design—do many of our Innovation events.

In Singapore we had representation from the entire financial services spectrum—banks, credit cards, insurers, capital markets firms and exchanges. We presented some of Celent’s recent thinking on innovation, much of it from our new innovation survey. But the main event was a peer discussion between the participants themselves.

It was one of the more lively discussions I’ve seen. We set aside two hours for the peer discussion, and it went by in a flash. Participants jostled to get their say in, and the session ended with the feeling that it could have gone several hours more. I think one of the keys was that there were a lot of different types in the room: the abovementioned full spectrum of FIs, from both the business and IT side, and even from compliance.

Everyone was naturally interested in how their “colleagues across the aisles” looked at innovation, how far each had come in achieving it, and what their technology, operational and cultural approaches were—or were not. Participants brimmed with on-the-spot case studies of initiatives at their firms. This was also refreshingly unusual, since firms are often reticent to divulge competitive information and “secret sauces.”

I think the reason for this relatively high level of enthusiasm lies in the industry’s realization that innovation is crucial to long-term success–and considering the rapidly expanding number of disintermediators, and the remarkable success of some of them, maybe even needed for short-term survival.

Insurance agents equiped with new tools to realize policy issue in real time in China

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