Culture of Innovation: Transforming Retail Banking
MFA Design Management Savannah College of Art and Design | Spring 2020 Thesis Committee: Tom Hardy, Peter Bartlett, Joshua Crafford Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Background & Initial Research
Art + Economics + Design Management
Creative Industry Banking Industry
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
The Impact of New Competitors
Fintech companies accounted for 38% of all US personal loans in 2018. - Rooney, 2019
Incumbent banks are at risk of losing billions of dollars in retail revenues in the next 3 ~ 5 years. - Accenture Fintech Report, 2020
40% of tech-savvy or Gen Z customers are ready to leave their current bank. - Techwire Report, 2020
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
The Impact of New Competitors
Just 21% of banks say their systems are agile enough for collaboration, and just 6% have achieved the desired ROI from partnerships. 70% of fintech disruptors (unsurprisingly) don’t see eye-to-eye with their bank partner’s culture or organization, and the same amount are frustrated by process barriers. - The World Fintech Report 2020 by Capgemini
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Problem Statement Retail banking has poor efficiency, structure & process, which all roll up into CULTURE to support disruption and innovation related start-ups and fintech to maintain competitive advantage.
Š Alan Liu
How might we use design management to create the culture of innovation in retail banking?
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
DMGT How to Define:
• Design Management • Creation of Culture
Competitive Advantage
Culture of Innovation
Retail Banking
• Culture of Innovation • Retail Banking • Culture in Retail Banking • Innovation in Retail Banking
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Research Process
Understand
Analysis
Synthesis
Storytelling
Prototype
Validation
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HMW use DMGT to create the culture of innovation in retail banking?
Stakeholder Map Shareholders
Suppliers
Venture Capital Facilitators Associations
Consultant
Fintech Companies
InsurTech Companies
WealthTech & CreditTech Companies
Big data & Al Companies Compliance & RegTech Companies
Retail Banking New Customers
Bankers
Universities
Accelerators & Innovation Labs
Payment & Remittance (E-Wallet) Blockchain & Digital Assets Companies
Regulators Media
NeoBanks/ Challenger Banks(Digital-only Banks)
Government Other Type of Banks
Direct Support Primary
Indirect Support
Secondary Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Secondary Research
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Secondary Research - Focus Areas
Retail Banking - Relationships & Trends - Competitor Analysis
Design Management - Design Thinking - Design Strategies
Culture of Innovation - Definitions & Examples
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Current Relationship
CreditTech Companies
BANK
Innovation Lab
Competition– Cooperation Relationship
WealthTech Companies
Fintech Companies
Regtech Companies
Inefficient
Inefficient
InsurTech Companies
Highly Efficient Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Ideal Circumstance
CreditTech Companies
Create a Culture of Innovation by DMGT to enhance efficiency & agility
BANK
Innovation Lab
Effective Partnership
WealthTech Companies
Fintech Companies
Regtech Companies
InsurTech Companies
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Competitor Analysis & Trends of Innovation
1. Personalization 2. Credit card management 3. Empathetic chatbots 4. AI advices for investment 5. Voice payments 6. Budget & money planner
Technology
Trust
7. Context-aware notifications 8. Gamification 9. Biometrics 10. Advanced geolocation (ATM or branches‌) 11. Combining with other fields (Daily life/ Ecosystem) (Bank 4.0)
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights – Secondary Research
• Customer behaviors are changing: lifestyle & mindset segmentation • Corporate culture is playing an important role in innovation processes: competitive advantage, competency & efficiency of innovation • Design thinking is one of the crucial tools to create a culture of innovation in retail banking: awareness of innovations, multi-disciplinary collaborations, sustainable competitive advantages
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Primary Research
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Participants:
Primary Research Methodology
Retail Banking Other Financial Institutions Customers Activities - Experiences
Survey
In-depth Interview
Cultural Probe
Workshop
Observation
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
23
30
In-depth Interviews
Types of Roles Participated
47 Banks involved
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Amarillo National Bank
Atlantic Union Bank
Citizens Bank
Centerstate Bank
Gateway
Fubon Bank (TW)
O-Bank (TW)
Sperry Federal Credit Union
Ogaki Kyoritsu (JPN)
Swedbank
Bank of Newington
Bank of America
Chase
Capital One
Citi
CTBC Bank
ConnectOne Bank
DBS
Diamond Trust Bank Tanzania
E.SUN Bank (TW)
Fifth Third Bank
HSBC
Hua Nan Bank
Key Bank
Lake Michigan Credit Union
Melli Bank
PCSB Bank
Presidio Bank (Heritage Bank)
Bank of Montreal
Patelco Credit Union
Sinopac (TW)
Truist (BB&T & SunTrust)
TCF Bank
Pinnacle Bank
Taiwan Cooperative Bank (TW)
PNC Bank
US Bank
NBT Bank
Standard Chartered
Wells Fargo
CIT Bank
First Bank (TW)
Office of the Comptroller of the Currency (OCC) Bank
Signature Bank
Yes Bank
ZA (HK) © Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
103 2200 300 Responses from survey
Data points
Synthesized Data Points
829 Cups of coffee
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Online Survey (Demographics): - Voices from:
55%
3% 2%
27%
49%
6%
Age:
6%
51%
18 ~ 24
14%
25 ~ 34
1%
40% 29%
35 ~ 44 45 ~
17%
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Online Survey (Roles of Participants):
PARTICIPANTS Others 16% IT Analysis/ Digital Channel Owner 5%
Branch Manager 26%
CEO/CIO/COO/ SVP/ BU-Head 5% Client Service/ Sales Representative 10% Innovator/ Designer/ Researcher 16%
Bank Teller 22%
Auditor Accountant Account Manager Branch Personal Banker / Bank Teller Branch Senior Manager CEO CIO COO Collector Client Service Representative Community Engagement District Manager Digital Channel Owner Designer Financial Analyst Group Director-SVP
Head of Consumer Finance Human Resources IT Analyst Innovator International Business Promoter Loan Officer Marketer/ Marketing Manager Mortgage Manager Product Owner/ Manager Relationship Banker Risk Management Officer Researcher Sales Representative Treasurer
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Online Survey (Results):
52% of bankers haven’t seen innovation culture at every department level of the bank, while
38% of bankers haven’t seen innovation culture in their banks.
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Online Survey (Results):
38% of bankers don’t think they fit into the current corporate culture.
20% of bankers don’t think every employee in the banks needs to be innovative.
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
In-depth Interviews: (Heart-based & Future-oriented Questions)
Quotes Comparison - Innovation (Between different level management)
“We are always remodeling our financial centers to make them more technology-based, and I believe we stay very far ahead of the competition because we are one of the only banks opening branches rather than closing branches.” - Catherine, Relationship Manager, Bank of America ( 9 years in banking )
“Think different, think outward in, think of customer experience first, then invent solutions. What Innovation is not: chasing shiny tech toys as a fix.” - CIO, Wells Fargo ( 6 years in banking )
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Other Quotes from Interviews:
Customer-centric
“Overall, the retail banking culture is still very much a sales-first environment. I’ve experienced a culture of sales-first which can, and often does, create a poor customer and employee experience.” - Branch Manager, Chase ( 6 years in banking )
Hierarchy
“People feel more equal. Titles are removed and no one is treated differently. There is freedom of when and where you work. Ideas are listened to, valued, and acted upon. There is laughter, fun, and joking around sometimes.” - Researcher, US Bank ( 6 years in banking )
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Other Quotes from Interviews:
Cultural Barriers
“Large retail bank are not have mono-cultural - ie they do not only have one culture. They have many cultures across different parts of the organization. In some parts of the organization it is not always desirable to have continues innovation.” - Researcher, A Large Multi-National Sub-Saharan African bank ( 16 years in banking )
Collaboration & Participation
“Although we are charging of the digital transformation for our bank, it is not enough if only the IT department pays attention to this because it is totally not efficient by back and forth. Everyone needs to participate and be innovative.” - IT Analyst, E.SUN bank ( 7 years in banking )
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
論文研究 Research for a Thesis
銀行創新體驗調查 Customer Experience with Innovation in Retail Banking Survey
Other Methods - Cultural Probe:
您現在常用的是網路或實體銀行？您滿意嗎？ 請於下方貼上 (若兩種都常用的話 可兩種都貼） Do you use online banks or physical banks more? Do you like them? (You can attach on both if you are using both)
•
Do you use online banks or physical banks more often? Do you like them?
•
What is your current experience of interacting with banks? What is your imagination of the future banking?
Location: Randomly (In the apartment complex, stores, library, etc.)
網路銀行(Online Bank, App)
實體銀行(Branch, ATM)
請寫下您的使用/互動經驗 和 您想像未來的銀行是如何 在便條紙(請註明是網路/實體)(可寫多張） write down your current experience of interacting with banks and your imagination of the future of banks on sticky notes and then put it into the hole. 並投入孔內 Please (Please note online banks or physical banks) (You can write more than one)
如您是銀行員請掃描此QR Code >> Please scan the QR code if you are working in a retail bank >>
*此調查僅為學校學術論文研究用途，不具名調查，且與銀行商業用途無關，非常感謝您的寶貴經驗！！ 如有任何問題請聯繫 Alan 0912-945-962
©school Alan Liu *All responses will be anonymous and confidential so please be as honest as possible. The use of your responses will be limited to this project. Thank you so much for your valuable insights and help with my thesis! Please contact me if you have any questions. Alan 0912-945-962
HMW use DMGT to create the culture of innovation in retail banking?
Other Methods - Remote Workshop (Role-Play Activity):
Participants: 7 people from various fields Location: Line - video conference Time: 9pm (AT), Friday, April 3 Period: 1 hour
Participants from various fields:
The roles participants played:
• • • • • • •
• • • • • • •
Carpenter (@Australia) IT (First Bank) Key Opinion Leader (Food Acc) Project Manager (Pou Chen Co.) Project Manager (Foxconn) Product Manager (BNP Paribas) Software Engineer (HTC)
Bank Teller Branch Manager CEO Client Service/ Sales Representative Marketing Manager IT Analyst VP-Branch Manager
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Data Analysis - Affinitization Process
HMW use DMGT to create the culture of innovation in retail banking?
Affinitization Process
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights • Conservative mindset
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights • Conservative mindset
• Free flow of ideas not being promoted
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights • Conservative mindset
• Free flow of ideas not being promoted
• Lack of education
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights • Conservative mindset
• Free flow of ideas not being promoted
• Lack of education
• Lack of collaboration
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights • Conservative mindset
• Traditional hierarchy
• Free flow of ideas not being promoted
• Lack of education
• Lack of collaboration
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights • Conservative mindset
• Traditional hierarchy
• Free flow of ideas not being promoted
• Obsolete leadership
• Lack of education
• Lack of collaboration
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights • Conservative mindset
• Traditional hierarchy
• Free flow of ideas not being promoted
• Obsolete leadership
• Lack of education
• Insufficient support
• Lack of collaboration
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Insights • Conservative mindset
• Traditional hierarchy
• Free flow of ideas not being promoted
• Obsolete leadership
• Lack of education
• Insufficient support
• Lack of collaboration
• Sales-oriented thinking
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Opportunities (Design Criteria)
• Shift to an empathetic mindset
• Build effective collaboration
• Build an inclusive environment
• Minimize hierarchy
• Build education for innovation
• Bring trust to customers
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Key Opportunities (Design Criteria) + Ideation
Empathy
Inclusion
Hierarchy
Education
Collaboration
Trust
Must have Should have Nice to have
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Ideation
Š Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Ideation/ Prototype - Framework Development
Š Alan Liu
THE HEXAGILITY FRAMEWORK FOR THE CULTURE OF INNOVATION AUTHOR: ALAN LIU Copyright © 2020 by Alan Liu. All rights reserved.
HEXAGONAL PATTERNS PREVALENT IN NATURE DUE TO EFFICIENCY In a hexagonal grid, each line is as short as it can possibly be if a large area is to be filled with the fewest hexagons. This means that honeycombs require less wax to construct and gain lots of strength under compression
© Alan Liu
HEXAGILITY FRAMEWORK
2 Hierarchy
Empathy 1
3
Inclusion
Education
6
4
Sustainability
Collaboration
The Hexagility Framework is inspired by the insights from thesis research and the classic double diamond of design thinking process. The framework is fundamentally creating the culture of innovation to enhance the efficiency of disruptive innovation and the agility of the organization.
5 Reflection
Š Alan Liu
HEXAGILITY FRAMEWORK
INTRODUCTION
Hierarchy
Corp.
Empathy
Inclusion
Problem(s)
Education
Value of the framework • Create the culture of innovation • Develop innovation strategies • Monitor and track the process
Who is this framework for • Multi-level leadership • Innovation directors • Culture builders
How to use this framework • There are 6 phases in total. Discuss and build the consent with team before move on to the next phase.
Tips before you start • Build a diverse team for the process • Keep a humble and respectful mindset
Branch/ Department Team(s)
Team/ Customer Idea(s)
Trust Beliefs & Norms
Sustainability
Prototype
Collaboration
Shared Values
Test
Strategies
Opportunities
Insights
Reflection
© Alan Liu
HEXAGILITY FRAMEWORK
Problem (s) Pr ob
ob Pr ) (s lem
Empathy
Stake -holders
lem (s)
Empathy & Inclusion - Define problems and stakeholders
Every innovation started with empathy which derives from people's curiosity, or observation. This phase helps to create empathy in retail banks through the practices of defining problems and matching with stakeholders.
Corp.
Inclusion Stakeholders Branch/ Department
How to do: • List out the problem(s) encountered/ observed during daily work and working environment at multi level • Identify the stakeholders in each level respectively
Stakeholders Team/ Customer
© Alan Liu
HEXAGILITY FRAMEWORK
Hierarchy - Take away the boundaries
Hierarchy Bank tellers CIO
Inc lus ion
Corp. Market Manager IT Analyst Branch/ Department
Market Manager IT Analyst CIO Problem(s)
Bank tellers
After defining problems and stakeholders, participants might notices that there are problems could be associated with different roles in different levels in organizations. This phase helps to rethink the traditional hierarchy in retail banks by eliminating the boundaries and developing the problem-oriented organizational structures. How to do: • Clean your mind to take away the boundaries • Group the problems you defined with the stakeholders • Write again into the inverted triangle. At this point, it is an opportunity allowing you to redefine the stakeholders again.
Team/ Customer
© Alan Liu
HEXAGILITY FRAMEWORK
Education - Share visions and knowledge
Hierarchy After taking away the boundaries and redefining the stakeholders, this phase helps to rebuild the team to solve problems through sharing visions and knowledge.
Bank tellers Market Manager IT Analyst
Education
CIO Problem(s)
Team(s) Problem(s)
How to do: • • • •
Build the team based on the problems and stakeholders Share visions and knowledge on this problems Align everyone’s knowledge for the topics related to problem Everyone is equal in this problem-oriented team
© Alan Liu
HEXAGILITY FRAMEWORK
Collaboration - Generate and validate ideas
Education
With adequate foundation knowledge, participants can start to collaborate with different parties to generate ideas and access the workability of the ideas
Team(s)
How to do:
Problem(s)
Idea(s)
• Each team generates idea according to the problem • Co-create quick prototypes to experiment the ideas • Conduct user testing to validate the idea
Prototype
Collaboration Test
© Alan Liu
HEXAGILITY FRAMEWORK
Reflection - Develop strategies
Idea(s)
After various user testing, participants can reflect on the result with their main group and further optimize their operation & ideas.
How to do: Prototype
Collaboration Test
Strategies
Opportunities
• • • •
Back to main group Generate insights from the testing Identify Opportunities Develop innovation strategies based on the opportunities
Insights
Reflection
© Alan Liu
HEXAGILITY FRAMEWORK
Sustainability - Bring trust to customer
Developing trustful relationship among customers would be the last step in an innovation plan in order to establish a stable business for a long time and retain existing customers. Trust
How to do: Beliefs & Norms
• Create shared values • Build Beliefs & Norms • Establish long term relationship
Sustainability Shared Values
Strategies
Opportunities
Insights
Reflection
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Validation - Testing & Feedback from Bankers
• • •
Went through each step Shared the experience Collected Feedback
“I think it’s really good to develop innovation strategies by this framework because it builds consensus with all levels in the organization. I just wish our C-suite can really involve.”
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Validation - More Feedback from Innovation Experts
Head of Innovation, HSBC (Dubai)
“I think it's valuable. I think it follows some of the things that we've put in place already in terms of an innovation process. But there is also one thing that you included that probably we can also think of incorporating, I think one thing that maybe doesn't happen quite enough as it should is the better way to let customers adopt the solution that you're proposing.”
“I think it's like a good high-level reminder for our team. I think I would take this and then second guidelines from my team of how to make sure that they're checking the box. I see most of the value not in necessarily the I don't know the big picture culture of change type stuff but more in driving culture of innovation through consistency of execution on project work.”
Innovation Lead, Bank of America
SVP, Head of Innovation, City National Bank
“Make sure that when we create change that we can sustain it and it can be adopted.”
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Validation - More Feedback from Innovation Experts
Senior Manager, Partnership Development & Innovation, HSBC (HK)
“I think the framework's really good. I think it's very up to date. If you look at like the consulting firms that work for us. They use very similar method.” “If including the regulatory knowledge for each market in your framework, and it's going to be better than most of the ones I've seen.”
“Simplify further.” “It might difficult to justify to the senior leadership of the value in implementation, if you don't reflect the business values/outcomes/ROI in such a framework.”
Experience Design & Innovation Manager, DBS (SG)
© Alan Liu
HMW use DMGT to create the culture of innovation in retail banking?
Future Development •
Remember to form teams including regulators and customers
•
Compare the business values/outcomes/ROI of the projects after practicing the framework
•
More proof of concept to showcase how it works
© Alan Liu
HEXAGILITY FRAMEWORK Hierarchy
Corp.
Empathy
Inclusion
Education
Problem(s)
Branch/ Department Team(s)
Team/ Customer
Idea(s) Trust
Beliefs & Norms Prototype
Sustainability
Collaboration Shared Values
Test
Strategies
Opportunities
Insights
Reflection © Alan Liu
HEXAGILITY FRAMEWORK Hierarchy
Corp.
Empathy
Inclusion
Education
Problem(s)
Branch/ Department Team(s)
CULTURE OF INNOVATION
Team/ Customer
Trust
Beliefs & Norms
Idea(s)
Prototype
Sustainability
Collaboration Shared Values
Test
Strategies
Opportunities
Insights
Reflection © Alan Liu
Thank you! - Q&A - Alan Liu