[The Institute for Innovation Development interview series will be inviting top innovation specialists from around the world to talk to our readers about global, cross-industry innovation activities and how to apply these innovation best practices to financial services businesses.
John Levis is the global Chief Innovation Officer and the Regional Managing Director—Americas for Deloitte Touche Tohmatsu Limited (DTTL). As the global Chief Innovation Officer, John drives the Deloitte network’s strategy of next-level innovation. He counsels businesses on how to transform innovation from an intangible, aspirational concept into a meaningful business strategy that can drive greater productivity and lead to a competitive advantage in the marketplace.]
Hortz: John, based on your global perspective and practical experience of helping businesses of all sizes grow across many industries, what is your perspective of biggest challenges for the financial services industry?
Levis: Through the lens of innovation, Financial Services faces many of the same challenges as other industries. Most industries are facing the omnipresent risk of disruption. Whether you look at indicators like the topple rate or the Foundation Index (rate of change enabled by digital accelerators and policy), or you look at exponential technologies and their unrelenting pace of advancement, rapid onset change and transformation is the new reality. The speed is accelerating and companies in most industries are grappling with how to keep up. Just look at the amount of technology driven change taking place in financial services – from upheaval in payments to explosion in personal wealth management and online/mobile banking, to high frequency trading. The amount of innovation taking place in Financial Services is on par with any industry. Many banks are aggressively exploring and experimenting with their visions of the digital bank of the future – the outcome of all of this experimentation and activity will undoubtedly be a significant transformation of the financial services industry in the years to come.
Financial Services has experienced increasing competition and eroding margins all the while facing loss of public confidence and increased regulatory pressure and scrutiny. A shift to a stronger customer orientation, is leading to a bit of a recovery in the public sentiment. We believe the right kind of innovation, which is highly customer-centric and focused on the public interest will be necessary to return the industry to a place of full trust.
Hortz: How can the small to mid-size financial advisor firms deal with and position themselves against these types of challenges and be able to survive and thrive in a world of accelerating change?
Levis: Small and mid-sized companies have an advantage in this environment as they are typically able to move with greater speed and agility than the larger incumbents. More often than not, it is the small companies and the upstarts that introduce the breakthrough transformational innovations. And if they are not the ones to introduce, they are usually better able to be fast followers. So a world of accelerating change actually works to their advantage from a competitive point of view.
We would advise these companies to learn the discipline and habits of innovation. What is clear from our research is that the best innovators are highly disciplined about what they do and innovation is something that can be learned and mastered.
Hortz: What have you seen works best to encourage advisors -- small to midsized business owners who feel they do not have the time, money or effort for innovation -- to make that jump to be more innovative?
Levis: There is a commonly held misconception that innovation requires a lot of investment. The research shows absolutely no correlation between the amount of investment and success at innovation. What it does show is that successful innovators are smart about where and how they invest. And many of the most successful innovators get things done frugally. Just consider the bootstrapping start-up that creates a disruptive new innovation at a fraction of the cost that it could have been done at a large corporation. For example, consider Theranos, a start-up which is now about to turn the $76B laboratory blood test diagnostics industry on its head. While they have now raised a lot of capital, the company was started by a 19 year old with little capital. Or consider the many software or internet start-ups, like Microsoft and Facebook, that were literally started in college dorm rooms.
Innovation most certainly does require time, effort and commitment. What I would say on this point is that innovation is not a luxury but a necessity. If one wishes to survive and maintain relevance, innovating and staying with the market is absolutely critical.
Hortz: Where do you see Financial Services stands on innovation versus other major industries? Why do you think that is?
Levis: As mentioned in the first question, Financial Services is innovating at a rate that matches any industry. And we expect a lot more innovation to come. Technologies like Artificial Intelligence (AI) and Big Data promise to unlock many new opportunities in consumer, corporate banking and capital markets. Voice recognition and other interfaces will dramatically change the customer experience. We’re at the tip of the iceberg and we expect an enormous amount of innovation and transformation ahead.
Hortz: To be more innovative, it is always recommended that you are observant and know what’s going on in other industries so you can use cross-industry pollination to stimulate ideas. Are there any industries of particular merit that financial advisors keep an eye on for ideas or situations that would best seed and develop some new thinking?
Levis: Financial advisors would be wise to take careful note of some of the changes and shifts occurring in professional services broadly. Human centered knowledge work is at the core of what they both provide. And professional services, from strategy consulting to auditing, is beginning to feel the impact of technology and we’re beginning to see new models emerging. AI, Big Data and Crowdsourcing are all impacting professional services. Healthcare is another space to closely watch as the entire patient-doctor interaction model is going through significant change. Fundamentally what you have is an empowered consumer with more information and more tools at his/her disposal.
But ideas can come from very unexpected places. Consider the Freemium model and Collaborative Consumption, which emerged in online consumer spaces but have made their way into numerous spaces, including B2B. It’s a good ethic to have a broad aperture when scanning for trends and opportunities for new ways of doing things.
The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial services firms. We position our members with the necessary ongoing innovation resources and coaching to drive and facilitate their growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors -- Innovation Equity Partners, Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, MeridianIQ/AdviceIQ, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information or to join click here.
Interview conducted by
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