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Agile Innovation in Wealth Management

Tuesday, January 16th, 2018

In our most recent report Innovation for Wealth Management our analysts are looking at different - successful and less successful - approaches for innovation in the private banking industry. The relatively new trend of Agile Innovation has not yet found many  followers within wealth management but it is worth a deeper look. The main benefits of Agile Innovation techniques are the breaking down of silos within an organization and the rapid development cycles which quickly lead to a real world test of a new product or service, or just a little new feature. The risk of huge sunk costs and bad technology investments is reduced. There is some evidence that Agile Innovation can significantly improve the success rate of innovation projects. Some surveys report a success rate of more than 60% of projects. However, these numbers should be taken with some caution as every new fashionable management technique runs the risk of being overhyped.

Looking at the banking and wealth management industry we also find some examples of Agile Innovation. German Fidor Bank, Dutch ING Bank and Scandinavian Nordea are among the champions of Agile Innovation in the banking industry. All of these initiatives are focusing on retail banking or transaction banking. It is striking that we could not identify even one wealth manager or private bank that is running an Agile Innovation project. This may be due to the greater secrecy among innovation projects in the private banking space. However, we fear that it is also due to the strong anti-agility attitude we are still seeing in the wealth management industry.

While Agile Innovation may have reminded some seasoned managers of other management fads they have seen come and go, we believe that it in fact does address critical shortcomings in the innovation cycle of wealth managers:

<  Innovation is cross-functional and not boxed in somewhere deep within the organization.

<  Creating customer value is the core of innovation.

<  Real customer feedback is the measuring stick for any new feature, product or service, rather than endlessly debating risks and opportunities.

<  Innovation is rapid, feedback is rapid and success will come quickly.

Agile Innovation is not the silver bullet for all innovation projects. And of course, there are constraints in banking, like regulation, that make some things impossible or slow them down. But it is a promising path that brings tangible results instead of lofty dreams. Linking Agile Innovation to a sound strategic process where goals and overall directions are clearly prescribed is therefore a good prescription for successful innovation.

Check out our new report on Innovation for Wealth Management.

 
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