In the banking industry and among those who commentate on it, talk of innovation and the "branch of the future" is rife. However, I've come to the conclusion that true innovation is rare. Globalization means that the future is often about copying and pasting, about ripping off and doing better, and about competing rather than creating.
Competing is straightforward, a question of copying your competition and responding to customer needs. Creating is about experimentation, upsetting the status-quo and changing the way a business is delivered to its customer base.
Too often, bank branches of the future are shown to be full of iPads, digital signage, self-service machines and video conferencing kiosks. These are not branches of the future — all of this technology is today.
While I'm all for making best use of technology and have talked a number of times about its role in transforming the running of a branch (here and here, for example), if you're talking about creating something new, a real "branch of the future," then I think the industry would do well to consider the following:
1) Recycling Failure
An early amusement arcade game involving a gorilla originally failed and was revived a few years later. Donkey Kong became the highest earning arcade game in history. Similarly Nintendo reworked a failed game involving a fat pizza delivery man. Super Mario ultimately saved the Nintendo business.
The same idea applies in banking. For instance, a decade ago Abbey National branches housing Costa Coffee bars failed to take off. Today online banks such as ING Direct are successfully showing their physical presence with ING Direct Cafes.
With a bit of lateral thinking, past failures can often be tweaked or revived to find the future. Consequently manufacturers of cash handling equipment may also want to revisit products that came too early and may now be more relevant to the modern market.
Today's competitive culture in the western world is in danger of stunting experimentation. For example, a European car manufacturer's expansion strategy is often simply to sell its usual car but in a new market. This is a straightforward plan that may do the job, but it's perhaps not the most creative approach to future planning.
This is why, in the same vein, we deem putting iPads into bank branches to be futuristic, rather than experimenting to create new technologies that meet a bank's needs better than an iPad ever could.
Branches of the future should be places to experiment. People who experiment create their own forum groups and followers. I recently downloaded an app that translates any foreign menu into English on my iPad screen in real-time. Someone developed this through experimenting, playing and creating rather than competing. Banks need to harness this creativity and experiment to make innovative products which meet consumer needs.
I've recently finished reading the Steve Jobs biography. Core to his success was absolute patience and persistence. Atari told Jobs to go away and that he was a hippy. HP threw him out telling him he smelled bad. Persistence was crucial to his success.
In 1993 a pop group called Ednaswap recorded a song called "Torn," which flopped. After various reincarnations of the song, in 1997 Australian singer Natalie Imbruglia turned the song into the highest selling single that year. Persistence and recycling failure made the original songwriter millions.
The banking industry is too quick to abandon ideas which have been tried before. The world is changing, and financial institutions need to ensure that their decisions on channel strategy meet this dynamic environment.
Ultimately, the future comes from experimentation, looking at past failures and eliminating the "we've tried that before" attitude.
Yes, banks are under pressure from a lot of different angles and may think true innovation is out of their reach, but in an increasingly competitive banking environment, creation and innovation will be essential to future success. And as I've shown above, it doesn't necessarily mean having to reinvent the wheel.