There is no question that there are costs associated with innovation. However, there are higher costs, especially in the long term, associated with running a business with a “that’s the way things have always been done” mentality. While innovation can cost money in the short-term, the ultimate goal is for the products of innovation to offset those costs with further sales and future growth. If an organization refuses to invest in innovation, the odds are that they will eventually be acquired or face indefinite stagnation.
For example, look at the financial services industry. Digital banking is not a new phenomenon. Rather, digital banking tools have been in use in some form since the mid-1990s. However, since COVID, the use of these tools is at an all-time high. Not only must financial institutions provide these tools to customers and members, but they must also recognize what this shift means to legacy ways of doing business. The shift represents a new way of engaging customers – live chat, mobile banking and text messaging all play a major role in our present reality. Even without traditional in-person conversations taking place in brick-and-mortar branches, it is still necessary to build and maintain personal, engaging relationships with customers to sustain and grow the business. Leaders of financial institutions understand this, but they want guidance on how to best proceed to avoid wasting money.
The answer is data. Data provides insights into customers in ways most financial institutions have never explored in a meaningful way. Bankers know where their customers work, where they buy groceries, and how they spend and save their money. This information can provide significant insight into what additional banking products and services would help them achieve their financial goals.
The same applies to commercial banking. Data provides a look into revenue and expense trends that can lead to new opportunities, including working lines of capital, refinancing real estate or other fixed asset loans, and recommending cash management tools to help clients maximize cashflow and investments.
There is often hesitation from the top when considering new investments in innovation. Many leaders feel they cannot afford to take on additional expenses while maintaining existing delivery channels. In these cases, there may need to be some right sizing of under-leveraged delivery channels to help offset the costs. Additionally, there are always opportunities to revisit contracts with core providers, telecom vendors and other legacy commodities with a focus on negotiation.
Hartman Executive Advisors takes financial institutions through an independent IT assessment to find opportunities to reduce legacy costs that can offset investments in innovation and position the organization to remain competitive and relevant now and in the future. To learn more or to schedule a no-cost consultation, reach out to our expert team today.
