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Kevin Tweddle: Weave innovation into your strategic plan

By Kevin Tweddle, ICBA

As we enter strategic planning and budgeting season, it has become routine to put items supporting growth, improved customer service and cost efficiencies on the agenda. But does innovation make your list? If not, it should. And not just as a line item, either. It should be woven throughout all of your strategic initiatives for the coming years.

Many banks still confine their innovation budget to their IT departments, with interdepartmental battles erupting across business lines and significant dollars wasted on projects with little strategic or enterprise impact.

Another common mistake among community banks is relying solely on their core account processor for innovation. While it may be tempting to lean on larger companies with more resources, these entities also may struggle with creating a culture of innovation, resulting in project delays and solutions delivered too little, too late. This lack of innovation speed has literally spawned and accelerated fintech startups’ use of modern platforms to solve specific problems within the banking industry.

Lastly, you cannot be innovative without strong leadership. Consultants and department leaders can be involved in the process, but buy-in and participation from one of the top three executives at your bank is an absolute requirement.

Putting the pieces together
So how do we avoid these mistakes, and what elements should we include in our strategic planning process?

To truly succeed, management must believe. I have yet to see a successful innovative bank that did not have strong leadership and participation from the C-suite. Why? Because innovation involves a higher level of risk than most activities. You need that support to tolerate mistakes, embrace change, reward successes and penalize inaction. The ability to accept failure, take corrective action and quickly move forward will take some serious “intestinal fortitude.”

Organizational structure and talent is critical. Those responsible for innovation must have a direct line to the top of the house. It requires diversity, education, collaboration and strong communication skills to ensure that progress is being made.

Infrastructure, systems and processes must be in place. Innovation does not happen overnight. It requires a more modern infrastructure that allows the team to move in short order to develop and execute relevant use cases that fulfill the bank’s strategy. Speed to market is critical, so the capacity to filter information quickly can allow for a faster decision-making process and higher accessibility to relevant information.

The time is now to embrace innovation in your strategic planning process and beyond. Your organization will be judged by how well you innovate and differentiate your bank for the foreseeable future.
