Creating Innovation – A Post-Pandemic Imperative

Nearly every banker I’ve spoken with in the past few months has posed the same basic question: What’s next? With the promise that the pandemic will eventually be behind us, everyone is trying to predict the “next normal” and imagine if they have what it will take to succeed — or even survive — in a post-pandemic economy.  

Obviously, there are many factors that will determine the answer to those questions. But if you pay attention to some of our industry’s favorite buzzwords, there are many characteristics that bankers will have to master in order to succeed. Agility. Adaptability. Empathy. I’d say yes to each one. But the core competency that will be critical for every bank’s long-term survival is a familiar term: innovation

I know what you’re thinking. Innovation has always been key to sustained success. Yes, that’s true. But if you don’t count big banks and fintechs, you’d rarely find banks on the list of the most innovative companies. Admittedly, this past year saw banks of every size innovate quickly in order to meet the crisis brought about by the pandemic. And while there are many banks that can point to instances where operational efficiencies were achieved or new ideas were implemented, it is important to remember that these innovations were not routine — and they were not always enterprise wide. Too often, innovation is seen as a short-term assignment rather than a long-term mindset.  

Moreover, banks usually equate the term innovation with technology and digital transformation. You may consider yourself innovative if, as an example, you brought in ITMs before your closest competitor or armed your personal bankers with iPads. But innovation must reach way beyond technology. Future success in financial services will require innovation in all areas: customer experience, staffing, remote work, marketing, even business models will need to evolve. In fact, our industry could learn from former Starbucks CEO, Howard Schultz, who said “innovation must be disruptive. And by disruptive, I mean disruptive. You gotta fracture and break the rules.” Let’s face it, banking has a lot of rules. 

But why is innovation so critical now? The answer is found at the intersection of at least three trend lines: humanity, diversity and technology. Let me explain. 

Humanity — I use the word humanity to express the idea that innovation becomes critical as shifts in human needs and human behaviors continue to accelerate. The pandemic and the subsequent recession have prompted changes in human needs on physiological, socioeconomic, and psychological levels. Social isolation, unemployment, and economic uncertainty influence most financial decisions — from daily to long-term. Will the 25-year-old customer need a car loan? Will the 65-year-old be able to retire?  

Think for a moment about how the pandemic caused customers to quickly adopt the digital and mobile behaviors that bankers have been promoting for years. Early indications are that customers have assimilated these new behaviors well and they’ve done it long enough now that new long-term habits are being formed. According to a 2009 study published in Psychology Today, the average length of time required for a new behavior to become a habit is 66 days. The pandemic has gone on for nearly a year and your customers have been making deposits with their mobile app, paying bills online, applying for loans without entering a branch. They have been using your drive through and other self-service options on their terms, often 24/7. What makes you think they will return to pre-pandemic ways of banking?  

Depending on your community, it may take some time before the profile of your average customer returns to pre-pandemic levels. And regardless of demographic profile or degree of affluence, the pandemic has influenced perceptions about convenience, health, safety, and simplicity and consumer needs and behaviors will be in flux for months, if not years, to come. Will your institution be able to adjust products and customer experience to align with those new needs and behaviors? When was the last time you connected with your customers and sought their input in the product development lifecycle? A bank’s ability to provide contextual, personalized, and relevant products and services will require more than collecting Net Promoter Scores and attempting infrequent improvement. 

Diversity — both inherent (ethnicity, gender, etc.) and acquired (life/professional experience) — unlocks innovation by creating an environment where different opinions can be expressed, and new ideas pursued. Diversity enhances creativity. It provides different perspectives and promotes better problem-solving. Diversity helps banks become much more dynamic and able to understand their customer base. Research from Harvard Business School found that a team with a member who shares a customer’s ethnicity is 152% likelier than another team member to understand that customer.  

Technology — Rapidly maturing digital technology will keep pushing the industry forward. The rapid improvements in artificial intelligence for fraud detection, credit risk modelling, etc. will reinvent how banks operate and how bankers spend their time. Enhancements to mobile technologies and expansion of 5G networks will compel banks to find newer, faster ways to bring mobile updates to market. Open banking and blockchain integration will restructure the banking landscape. These are just a few examples of how technology will shape future innovation.  

Netflix is a perfect example of a company that discovered customer-focused innovation at the intersection of humanity, diversity, and technology. As the pandemic hit and shelter-in-place orders were issued, people were looking for entertainment and escapism to get through the early days of the pandemic. They were already in a strong position to meet that need, but they quickly adjusted marketing, repurposed content and added more original programming for streaming. Early in the crisis they launched a $100 million coronavirus relief fund for out-of-work creatives to help ensure their content pipeline. As subscription numbers grew, they adjusted their technological capacity to meet demand and made news when they announced plans (at the height of civil unrest in the US) to put up to $100 million toward financial institutions and other groups that directly support Black communities in the U.S. It is no surprise they were among BCG’s list of the Most Innovative Companies of 2020. 

In the past 23 years, Netflix has gained nearly 200 million subscribers in 190 countries. That growth is directly attributed to their innovation-oriented culture of reinvention. So how can your bank become more like Netflix? Start by creating an innovation culture. When you elevate innovation to the status of a core value — an organizing principle for your bank — you begin to change the outlook and culture of your organization; and you transform the conversation in your board room, and your break room. 

As you begin to consider your institution’s capacity for innovation, take an honest look at how your current culture reflects these four characteristics: 

  • Innovative cultures encourage autonomy. From day one, Netflix focused the culture on employee empowerment and independence. The typical banking leadership style of command-and-control is difficult enough with five generations in the workforce and a talent crisis on the way; and is certainly less viable in the work-from-home era. Let go of the reins and create an environment where individuals and cross-departmental teams have freedom to express ideas, experiment and make decisions. Try identifying one customer-facing problem and give 3-5 people a budget and a deadline and then get out of their way.  
  • Innovative cultures also foster alternative solutions. You have likely heard the old saying that the definition of insanity is doing the same thing and expecting a different result. That thinking is the antithesis of innovation, and unfortunately it is alive and well in banking — but it doesn’t have to be. Tried and tested practices may feel safer, and trusted partners feel comfortable. But new solutions are often found by exploring new approaches and engaging new partners. When was the last time you asked a front-line employee, rather than a senior manager, how they would solve a particular problem?  
  • Innovative cultures give people permission to fail. Your team members will try new things when they know that they will not be fired or reprimanded for giving something a try. Once again, Netflix offers an interesting example. When an employee makes a mistake, they are encouraged to let it be known so fellow employees can learn from the errors and new ideas can be stimulated. Permission to fail allows employees to step outside of their comfort zones, to take more risks and to bring forth an innovative idea.  
  • Innovative cultures promote action. Decisions need to be made quickly and the right actions (based on data, customer feedback, analytics, etc.) must be taken, acknowledged and celebrated. Fast and effective decision-making structures exist, and fast and efficient communication supports implementation.  

A recent report from Accenture noted “Yesterday’s expectations for innovation are out the window. Even though the stakes for innovation in banking were rising even before the coronavirus arrived, now a true culture of innovation is a matter of survival through, and beyond, the pandemic.” 

I’ve used Netflix as an example of an innovative company, but there are leaders in our industry who have focused their banks on finding innovative solutions for their customers. And it isn’t just the large national and regional banks. Take the time to learn about institutions like Cross River Bank in New Jersey and discover how they reinvented themselves and deployed APIs to originate loans for Affirm or Rocket Mortgage. Or discover the innovative leadership at Citizens Bank in Oklahoma, who partnered with Shark Tank’s Mark Cuban to create the nation’s first bank exclusively to originate and fund PPP loans for businesses across the country.  

As you take the time to consider your own institution’s capacity for innovation, ask yourself “Do I have it in me?” Innovation requires fearless leadership that doesn’t use legacy technology as an excuse for maintaining the status quo. The pandemic has created an opportunity to break the inertia that has kept innovation from flourishing. Now is the time to commit to innovation and begin the work of reinventing your institution. I’ll admit, some consumers will return to pre-pandemic behaviors, and so will some banks. But given the changes we’ve already seen, I’m confident that banking will continue to evolve as consumers demand more innovation. 

Sullivan will be a keynote speaker at the WBA Management Conference, September 13–14 in Green Bay.

About the Author 

Joe Sullivan is CEO and founder of Seattle-based Market Insights, a consultancy with expertise in strategic planning, delivery optimization, culture transformation and leadership coaching. He can be reached at, or on Twitter — @mi_sullivan.

By, Ally Bates