Due to fiercer competition, banking institutions now need to pay far greater attention to product innovation. For one reason, new customers are now demanding more than just a checking account or debit card.
They want tailored products specifically designed for them. These customers are also willing to move to other banks if they don’t like the products they are offered.
With this in mind, this article suggests that banking institutions need to develop an organizational culture that is nurturing innovation, and that this is the key to success in product innovation.
Why Product Innovation Is Crucial Now in Banking
The product innovation process is the key to success in banking institutions. However, it is also a difficult process in this age of fierce competition.
This is particularly true for new customers, who are now more demanding than ever. It is for this reason that product innovation has become a key agenda for everyone in banking institutions.
It has also become a key agenda for regulators and the media, who are now focusing on product innovation as an issue that needs to be addressed by the industry.
Now, a major obstacle to the successful implementation of product innovation programs is the lack of an appropriate organizational culture.
How to Accelerate Product Innovation in Banking
The following aspects of an appropriate organizational culture appear to be critical:
Innovation-Friendly Culture
Innovation-friendly cultures are open to idea generation, “thinking out of the box”, and risk-taking. They are not shackled by rigid hierarchy, rules, and policies.
They actively seek out new ideas. Then, they encourage and support employees who show a willingness to be creative and innovative.
At the same time, these cultures place emphasis on process quality management. And they require all decisions to be based on facts rather than gut feel or personal biases.
Strong Customer Orientation
Strong customer orientation means a culture that values customer needs above internal ones. It also encourages employees to develop innovative products that are tailored for customer needs.
Strong customer orientation also means having a clear understanding of customers’ needs, coupled with an ability to design products that meet those needs at an affordable price.
A Culture of Self-Discipline
This culture dictates adherence to rules and regulations and encourages innovative thinking. At the same time, it ensures the safety of customers’ funds and other assets.
Self-discipline also means discouraging employees from taking shortcuts in their work. And this is regardless of whether they lead to success in product development or not.
The bottom line here is that employees need to have a sense of integrity with regard to their work processes and their outcomes.
Wrapping Up
The above list is not exhaustive, but it does cover some key aspects of an appropriate culture for successful product innovation in banking institutions today.
However, it is noteworthy that these aspects cannot be simply created from scratch.
Instead, they must grow over time through positive reinforcement from leadership teams, firmed up through employee training programs, reinforced through mentoring programs, and employee recognition programs.
Do you know any other key aspects of an appropriate organizational culture for product innovation in banking institutions? Please share them with us.