How Financial Institutions Can Drive Innovative Culture
In today’s highly competitive and quickly-changing banking industry, the pressure is on for banks to prove their relevancy to their customers and outperform their competition. Banks today understand the critical need to connect with customers emotionally and to develop services to fulfill their unmet needs.
And yet, innovation can be a difficult process to nurture in the banking industry. Many financial institutions have firmly embedded legacy systems, strict regulations and budgets, and may have developed risk-averse attitudes.
It is ultimately your organizational culture that can overcome these barriers. No matter how much you focus on being cutting-edge in your mission statements, your people have to believe in it to move forward. Even if your primary strategy is to work with established Fintech brands rather than develop new ideas internally, the right culture will help recognize potential partners and ensure that your organizations mesh well together. So how can you foster a more innovative attitude in your organization? The following questions are important to consider when addressing that challenge.
1. Do employees feel comfortable bringing up new ideas?
For high performing teams at Google, research deems ‘psychological safety’ as one of the most important qualities within a successful group of people. This term refers to a degree of comfort with each other, where each person feels like they are being heard, can take risks, and can speak and be vulnerable without being embarrassed or insecure.
Power dynamics between management and lower-level employees can make it tougher to develop this type of trust between people, so hierarchical organizations need to work harder to foster it or move towards a flatter structure. Input from all employee levels should be valued since diverse perspectives are important and good ideas do not just come from management. Building positive employee relationships and an open, friendly, and trusting atmosphere is vital in creating a collaborative culture.
2. Are employees motivated to innovate?
An innovative culture is an environment where employees are motivated to come up with new ideas. This motivation is most powerful if it is intrinsic rather than the rewards-based extrinsic type. “Intrapreneurs” within your organization with intrinsic motivation will be enthusiastic about unprecedented ideas and are also more likely to be fulfilled and committed employees, since they will feel connected to their work and genuinely care about improving services. Additionally, efforts to build employee satisfaction and provide meaning through work are also likely to increase the desire to participate in innovative initiatives.
A disgruntled and unhappy employee will not feel very motivated to generate new ideas for a company or manager they despise, after all, no matter what incentives and rewards they receive, although it is important to consider the extrinsic motivation component to show appreciation for their effort. It is also important to continue to be open to new ideas and communicate why they may not be able to be implemented so that employees do not lose their motivation.
3. Does your workplace environment foster innovation?
Stressful and short-staffed workplaces leave little room for creative thinking. If employees are just trying to get through the day, it will not be a priority, and toxic environments filled with fear of lay-offs and negative interactions are definitely not conducive to the open-minded thinking that is often needed for new ideas. While competition between employees can be positive, it may also cause employees to avoid useful collaborations. Your reputation is important to consider as well. Even if your workplace has a positive atmosphere, organizations that are perceived to be boring or traditional may not attract innovative employee talent.
Another key element to think about is whether or not employees have the time and space to come up with new ideas. Are there common areas that employees can use for informal discussions? Are they able to take breaks from their daily tasks or are they required to remain solely focused on them? These cultural factors can impact the level of invention that an organization generates.
Some financial institutions have developed “innovation labs” to demonstrate their dedication to it and provide a space for team members and external entrepreneurs to gather. For example, Axis Bank in India has a “Thought Factory” facility where they are “build[ing] an ecosystem where both corporates and start-ups can team up to develop and grow together” and includes an “In-House Incubator” and “Accelerator.” These types of initiatives provide a framework to build an innovative culture.
Improving the social relationships, employee motivation, and workplace atmosphere in a financial institution will help develop a strong organizational culture. Cohesive, motivated groups of people can accomplish great things, and culture plays a large role in shaping these teams. With employees working together and partnering with collaborators, financial institutions can break down innovation barriers and deliver strong services to their clients.