Innovation isn’t easy. If it were, there would be 200 companies like Apple and Google.
In financial services, once a hotbed for new thinking and leveraging cutting-edge technology, innovation has taken a back seat because of business rationales, both real and fabricated. Innovation barely exists at many organizations because it has been pushed so far to the back -- like the last row on a 737. Against the bulkhead. In the middle seat.
The shift away from innovation coincides with the most recent financial crisis. At one time, most financial firms were pushing the envelope when it came to new technologies. Today, only a few mega-financial services providers continuously test the newest technologies to see if there is a fit for their business.
Fidelity Investments, which itself spends approximately $1 billion on technology a year, continues to fund its Fidelity Center for Applied Technology. Compared with Fidelity’s overall tech spending, FCAT’s budget is tiny. Located in Boston, FCAT regularly works with students from nearby MIT and Harvard to test wearable computing (Google Glass), gamification ideas, artificial intelligence, and more. Do all of FCAT’s projects make it into production? No, but that’s not the point. The idea is to find the tools that have applicability to financial services.
Across financial services, there seems to be a reluctance to try new technology. Perhaps budgets are so tight that running a technology lab isn’t in the cards. Or maybe, managers have become so risk averse that they are focusing on things that will provide immediate value to the business. All of those reasons are valid, but they could also be dangerous.
If an organization decides to use only what is proven today, it risks missing out on a newer technology that could provide competitive advantage in the near future.
Many firms are taking the wait-and-see approach to big data and cloud technology. Most are piloting big-data projects, but only a few have been able to move a big-data tool application to production. With cloud technology, most financial firms are sticking with their current data architectures, despite high costs and limited flexibility. Most are delaying adoption of public cloud because of regulatory fears. While some of the concerns are valid, a good portion of the reluctance is simply traditional corporate IT culture cloaked by security and regulatory objections.
Delaying big-data projects and cloud deployments may seem like a prudent decision now. But longer term, firms that ignore big new tech will find themselves at a competitive disadvantage to firms that have increased flexibility and lower costs because of public cloud and that know much more about their business opportunities because of big data. In other words, delay cloud and big-data projects at your own risk.