I have been talking to banks about how they use data, and how they build, buy and deploy technology for almost 30 years. I’ve told this story before, but I remember a time when major global banks were talking about developing their own proprietary operating system. I’ve hosted roundtables where security managers visibly flinched when conversations turned towards the use of cloud platforms in financial services.
Today, it is easy to debate how many institutions have actually embraced open banking. Large transformation projects are ambitious, but also costly, and complex. Bank and fintech company partnerships, meanwhile, are full of nuance, and we all know that the difference between success and failure is all about the nuance.
However, banks and incumbent financial services have come a long way since Geri Halliwell donned a Union Jack mini dress on British TV. To ignore and dismiss the work done by banks to embrace new technologies and offer more digitally led customer solutions is to fail to see the entirety of the financial technology ecosystem that has evolved over the past few decades.
It is easy to wish for a greenfield site, devoid of legacy infrastructure and vastly diverse customer groups, to create a shiny, new ‘grand designs’ banking utopia. But, as any avid viewer of home renovation TV knows, the skill, hard work and creativity needed to turn a 1970s teardown into a Pinterest-worthy architectural showstopper comes from a deeper and more purposeful place.
Showcasing this work is The Banker’s Innovation in Digital Banking Awards (IDBAs), whose winners were announced last week. The 18 separate regional, global and category awards emerged from a wealth of banks and technology providers. Innovative products and services covered a range of banking sectors including retail, payments, wholesale, and investment banking.
One of the most common complaints surrounding discussions around innovation at banks is that most of it falls into the category of ‘innovation theatre’. A separate innovation lab is created, a few fintech start-ups are invited in to mix and mingle with bank staff, a pilot or a proof of concept is enacted — but at the end of the day, no real financial innovation is achieved. Most importantly, this so-called ‘innovation theatre’ doesn’t take too big a bite out of the real IT budget for the bank.
The winners of the IDBAs for 2023 have not taken that route.
For example, the winner for Asia-Pacific, Habib Bank Limited, has invested Rs13.5tn ($46.9bn), equivalent to 7.1% of its income, in digital transformation. The North American winner Citi, set aside $1bn in technology, to focus on four client growth missions.
Union Bank of India, which received the highest award for bank/fintech partnerships, conducts open forums for fintech companies to resolve their queries on the onboarding process, a common issue among these firms. This forum saw more than 150 firms participate. There was also a 300% increase in application numbers.
The Banker’s CIO of the year, Adil El Iraki of Attijariwafa Bank/Wenov, launched an open innovation programme, called the Financial Catalyst by Wenov, which allows it to collaborate with African start-ups, such as Moroccan fintech A2im, to co-develop tailor-made solutions.
Many entries highlighted their commitment to combating climate change and goals to achieve net zero. OakNorth Bank deserves a special mention for its ON Climate programme, which won in the financial wellness/goodness category.
OakNorth Bank’s ON Climate is a software-as-a-service application that was developed by the bank’s team of credit scientists and software engineers, in close collaboration with 10 US banks and 27 climate experts. It applies to six scenarios that are aligned with the Network for Greening the Financial System’s climate scenarios, the Paris Accord and the May 2021 US Executive Order.
The winner in central and eastern Europe, BNP Paribas Bank Polska, also showcased its commitment to the environment. One such action reduces the negative environmental impact of the bank’s operational activities, among other things, the use of paper, which involves simplifying and digitising processes.
This has seen a reduction in paper equivalent to five large trees and 1050 cubic metres of water.
Since we all know innovation doesn’t happen in a bubble and no bank is an island, not all IDBA winners were banks. The open banking award went to Chicago Advisory Partners for its role in supporting Open Finance Brazil — an industry-wide initiative including the entire Brazilian financial system, ranging from the regulator (Banco Central do Brasil) and major banks like Banco do Brasil, Itaú Unibanco, Caixa Econômica Federal, Banco Bradesco and Santander Brasil to credit card companies, as well as key new entrants like Nubank and fintechs, among others. Brazil’s open banking project is considered one of the most interesting projects going on in the world currently.
Most importantly, many of the winners of this year’s awards understand that any transformation or new product or incremental change takes a team and made pains to emphasise that.
Emirates NBD’s innovation journey, which it calls the ‘Future of Banking’, gathered pace in its fourth phase when it shifted to an accelerated rate of delivery and launched a rewards programme for its teams.
The 2023 global winner, Banco Santander, has almost completed one of the most ambitious projects currently attempted by a legacy bank — a complete worldwide cloud transformation.
The response by the teams inside the bank caused the most reaction from global chief information officer David Chaos, who says many teams feel a renewed sense of mission.
“I get emails and calls from people saying, ‘thank you for bringing this’, because we developed this piece of software 20 years ago and now it’s a pleasure for me now to go and take it to the cloud,” he adds.
Again, congratulations to all the winners.
Liz Lumley is deputy editor of The Banker. Follow her on X (formerly known as Twitter) @LizLum
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