Want to know what’s common between the top 10 most innovative companies in finance?
It is their unrelenting commitment to adapting, evolving, and driving financial solutions forward.
From fintech giants to smaller, agile firms, these leaders all share a proactive mindset that continuously pushes boundaries.
They are committed to fostering innovation in finance at every level.
Even a Chief Financial Officer’s role is not just about managing budgets, reducing costs, and ensuring enough cash flow to keep the business steady anymore.
It is to navigate modern business challenges, be prepared for upcoming trends, engage every single team member based out of global bases, and more.
So, how do you foster innovation as an innovation manager, a CFO, or a leader?
What Does “Innovation” Mean in Finance?
Remember the post pandemic era? Almost all of us went to physical bank branches for handling our financial operations like opening accounts, making deposits, or applying for loans.
But when the pandemic hit, branch visits dropped sharply! The customer interaction was bound to drop since our needs and expectations as customers shifted overnight.
We were not allowed to do the basic activities and rightly so. It just wasn’t feasible.
Luckily, banks with innovative and agile CFOs adapted quickly.
They saw it as a chance to innovate, it led them to launch mobile banking apps and expand digital services.
Within months, customers could apply for loans, open accounts, and manage their finances entirely online – all without stepping into a branch.
Essentially, innovation in finance is about managing money smartly and at the same time staying agile, adopting technology, and meeting customers where they are.
It’s about transforming customer experiences, enabling smarter decisions, and creating a positive impact on people’s financial lives.
This could mean offering more personalized services through data analytics, improving accessibility through digital tools, or reimagining investment opportunities with sustainability in mind.
And the customers reward innovation quickly!
Now over 75% of consumers use digital channels, surging the digital banking adoption rate by over 20%. (McKinsey & Co.) This shows that innovation leaders and managers need to shift from traditional finance to innovative and modern financial innovation.
Why fostering innovation in finance is essential?
The financial sector plays a foundational role in the economy.
Every new solution or process that improves efficiency, boosts accessibility, or protects data doesn’t just benefit the company. It benefits the society. For instance, digital wallets and mobile banking apps have given millions in underserved areas access to banking services for the first time.
These innovations fuel economic growth, close accessibility gaps, and build a more inclusive financial system.
Sticking to the status quo in finance means falling behind. When your customers are expecting faster, personalized services, and are more open than ever to digital-first approaches, digital solutions become more of a necessity.
A study by Deloitte highlights that 78% of financial leaders say innovation is a priority, and those who invest in innovative approaches see higher customer loyalty and brand strength.
Whether it’s social innovation in finance or harnessing data to predict market trends, innovation is the keyword.
At InspireIP, we’ve seen firsthand how our clients’ focus on innovation has transformed their approach to managing intellectual property (IP) and harnessing new ideas.
How do you foster innovation?
#1 Focus on Intrapreneurship
Consider what Goldman Sachs, a major investment banking company, follows.
They have a program called “GS Accelerate” that provides every single employee with resources to pitch and pursue internal entrepreneurial ideas.
Their successful project–Marcus–is proof that intrapreneurship initiatives lead to innovation and financial growth.
Their Marcus project–a consumer banking service–literally expanded Goldman Sachs’ offerings for their business.
Simply put, innovation starts with culture.
The most forward-thinking CFOs and executives are empowering employees to think creatively, share ideas, and collaborate freely.
This cultural shift often involves leading by example, celebrating both wins and failures, and providing the necessary resources for brainstorming and development.
You must create channels for employees to submit and discuss ideas, or organize cross-departmental “hackathons” that let them tackle real-world challenges.
#2 Leverage Data Analytics to Drive Decisions
It’s pretty straightforward.
A real-time data analytics tool would give you and your team instant visibility into cash flow, forecasting, and budgeting.
Instead of finance reports that are always a few weeks behind or relying on spreadsheets that have to be manually updated and passed around, go digital with data analytics.
Even a slight delay can lead to lost opportunities.
But since data is the lifeblood of the modern finance sector like every business, the new data system could instantly show trends, identify areas where cash flow was tightening, and pivot immediately.
By using advanced analytics, financial institutions can gain insights into customer preferences, unexpected surges in demand, market trends, and risk factors.
By now, 90% of financial firms view data analytics as key to their innovation strategy (Statista, 2023)
#3 Prioritize Customer-Centric Approaches
Customer interests, demands, expectations always change because their pain points and needs evolve. It’s the universal truth.
At the moment, their post-pandemic requirements include personalized, flexible, and creative solutions. You need to focus on providing what they need.
Listen to customers’ pain points and innovate based on their needs.
To foster this mindset, financial firms can regularly survey customers or use social media insights to adapt their services based on real-time feedback.
Better yet, you must continuously brainstorm and ideate to create solutions that make the lives of your customers better before they even demand.
Let’s look at it with an example.
Say you are a regional bank, and your product development team receives a feedback from small business clients.
They feel your loan application process is overly complicated and time-consuming. They express frustration, particularly since larger banks were offering faster online options.
Your finance team was initially skeptical of changing long-standing procedures, worried that faster approvals could lead to increased risk.
However, a data analyst decides to look deeper.
They analyze customer feedback, compare approval times with customer retention rates, and discover that small businesses facing delays were 30% more likely to switch to competitors.
Your finance team receives these findings, highlighting how these clients represent a significant share of the bank’s future growth potential.
Based on the data, the bank pilots a streamlined loan approval process specifically for small businesses.
The result? Small business clients became more satisfied, and the bank saw a huge increase in loan applications.
What are the two things you learn from this hypothetical situation?
- The power of a customer-centric approach in finance. You can capture new growth opportunities without sacrificing sound decision-making.
- Your finance team and other departments need to collaborate and work together to innovate and solve critical business challenges.
#4 Invest in Emerging Technology and the Digital Future
The way the internet connects, simplifies, and unlocks new ways of engaging and interacting, technology in financial innovation leverages the digital potential as well.
By adopting technologies like AI, robotic process automation (RPA), blockchain, and biometrics, companies can streamline operations and enhance security.
This is why the global market for AI in the finance sector is projected to reach $64.03 billion by 2030, growing at a CAGR of 21.4% from 2023. This indicates strong growth driven by financial innovation needs (source: Grand View Research).
Artificial Intelligence (AI)
Just look at OpenAI by ChatGPT. When it launched, everyone was buzzing about its conversational skills.
Now, it’s evolved to analyze images, understand spoken language, and deliver real-time insights—a game-changer for customer support and tailored financial services.
This is where tools like InspireIP’s Idea Assist come in. Designed for innovation teams, Idea Assist helps companies harness AI for brainstorming, idea capture, and stakeholder engagement—fostering a culture of constant innovation, which is critical for staying competitive.
Internet of Things (IoT)
With over 43 billion IoT devices worldwide in 2023, real-time data is at our fingertips.
Banks and financial institutions are using IoT data to better understand customer behaviors, enhance security, and refine services.
Just imagine integrating IoT insights with a centralized tool like IP Assist, which manages invention disclosures, patent portfolios, and tracks innovation pipelines.
Combining these tools allows finance firms to stay agile, secure, and one step ahead.
Blockchain Technology
Blockchain is another big player, known for its transparency and security.
DeFi (Decentralized Finance) platforms, which cut out traditional banking intermediaries, allow direct peer-to-peer transactions on the blockchain.
By 2023, global spending on blockchain is projected to reach $11 billion. Financial institutions like Visa and Mastercard are exploring decentralized transactions to speed up processes and cut down costs.
And, consider how PayPal is exploring blockchain to enhance transaction security.
The brand’s commitment to a digital-first approach has kept it at the forefront of online payments and ace innovation in finance.
Cybersecurity
As finance grows more digital, cybersecurity is more crucial than ever.
Financial institutions worldwide are spending more than $100 billion annually to prevent data breaches, which remain a major threat.
In response, firms are focusing on everything from network security to advanced AI-driven threat detection.
HSBC and Bank of America, for instance, have bolstered their security measures with AI to better predict and prevent cyber attacks.
Emerging technologies also complement cybersecurity, adding an extra layer of security through decentralization and encryption.
Related Read: 6 Top Innovations You Must Start Harnessing Today
#5 Encourage Continuous Improvement
Implementing big changes in business, like transforming an entire financial strategy, fails about 70% of the time.
Think about it.
If you wanted to run a marathon, would you start by running 26 miles on day one?
Or would you prefer to begin with shorter runs, gradually building up your endurance over time?
Just like with training, transformation in finance is a journey.
We don’t see immediate results from small adjustments in budgeting, risk assessment, or digital upgrades. We don’t see it if we abandon the changes after a few months.
Success comes from committing to those gradual shifts, like automating a few routine tasks first, then scaling up.
Encouraging a mindset of “continuous improvement” motivates employees to find new ways to streamline, enhance, and innovate.
And here’s a fact to motivate you: According to Bain & Company, companies with a strong culture of continuous improvement outperform their competitors, often achieving growth rates up to 3.5 times faster (source: Bain & Company).
#6 Create a Strategic Roadmap for Innovation
Setting a clear roadmap aligns your organization toward a common goal, innovation in finance.
This roadmap should include steps for implementing new tech, fostering collaborative cultures, and continually refining processes.
Here are four practical steps finance leaders are taking, and you can too:
- Inspire and Lead by Example: Show that innovation matters by supporting ideas, even if they’re unconventional. This approach encourages employees to think creatively.
- Support Cross-Functional Collaboration: Innovation often happens at the intersection of departments. Break down silos and promote collaboration to spark fresh ideas.
- Establish a Centralized System for Idea Management: Tools like InspireIP’s idea and innovation management software make it easy to capture, evaluate, and refine ideas, keeping everyone involved in the innovation process.
Recognize Success and Embrace Failure: Celebrate wins, no matter how small, and view failures as learning opportunities. This mindset shift can create a supportive, innovation-driven culture.
#7 Use Global Platforms for Collaboration and Innovation Challenges
As discussed above, it’s all about adaptability, resilience, and keeping up with the rapid pace of innovation.
That’s why financial organizations increasingly turn to global platforms for collaboration and innovation challenges as a way to harness fresh ideas and drive growth.
By tapping into global talent pools and uniting cross-functional teams, financial companies can solve complex issues, stay competitive, and foster a more innovative culture.
To run a successful innovation challenge:
- Have a medium for the entire innovation process
- Must support integrations
- Identify the area that needs immediate improvement
- Describe the challenge in detail
- Give specific instructions on why employees must participate in the challenge
- Foster real-time collaboration
- Acknowledge, appreciate, and reward valuable contributions
- Take a leap of faith and start innovating
Ending Note
One thing is clear, sooner or later, you will have to create an innovation strategy. By following these seven proven strategies of innovation in finance, top the innovation adoption curve, driving value not just for you but for the broader economy.
