FinTech in the Realm of Open Innovation
-Abhinav Guptha, Lead, FinTech Vertical, T-Hub
When it comes time for innovation, undoubtedly fintech vertical has surpassed every metric in comparison with any other verticals like health, education, mobility, etc. The emergence of blockchain based digital currencies have oriented best of the minds globally to work on it and make instant value. All this is a global reality as industry has started using open innovation platforms to create wide, interoperable, and technology-based systems with meaningful partnerships across corporations and startups. Globally various initiatives are being taken by consortiums and corporations individually to create open innovation platforms like APIX, Regulatory sandboxes, Nfinite, etc. and dedicated innovation teams to source and catalyse innovation. Too often, innovation efforts are reduced to a series of brainstorming sessions, where facilitators are oriented to single minded propositions. In some cases, an innovation may be separated from the rest of the enterprise in a special lab or unit, a thin effort to quarantine the crazies.
Here’s the problem— the evidence shows that such techniques do not actually lead to better outcomes. Our experience and research with many of the corporations working in the fintech domain with startups across the globe have displayed sub-standard outcomes. Also, when we glance around at the state of contemporary innovation suggests we’ve gotten a little better, but still do plenty of things that are more grounded in hope or habit than evidence. I strongly believe that the fintech industry at large is overdue for a revolution in the way innovation is diagnosed, developed, fostered, de-risked, launched, and amplified. I have listed down few pointers based on our experiences working with top innovative companies in the world using open innovation platforms. The explanation of the pointers below here helps establish a nuanced understanding of what innovators using open platforms must do.
Innovation Is not Invention
Innovation may involve invention, but it requires many other things as well—including a deep understanding of whether customers need or desire that invention, how you can work with other partners to deliver it, and how it will pay for itself over time. Organisations like Square have demonstrated ability to understand the pulse of their user segment and created new offerings with high-value propositions.
Innovations Have to Earn Their Keep
Simply putting: innovations have to return value to you or your enterprise if you want to have the privilege of making another one someday. I like to define viability with two criteria: the innovation must be able to sustain itself and return its weighted cost of capital. Innovation managers working with fintech players must understand the novelty is only one side of the coin. Upkeep metrics are imperative, what open innovation can offer them is the low cost of innovation acquisition.
Very Little Is Truly New in Innovation
Biologist Francesco Redi established the maxim: “Every living thing comes from a living thing.” Too often, we fail to appreciate that most innovations are based on previous advances. Innovations don’t have to be new to the world—only to a market or industry. Especially individuals dealing with open innovation platforms must be conscious of their curation criteria. Search for only disruptive services may lead to disappointment, as most of the offerings in open innovation platforms are derivatives of incremental innovation. It is the association with your organisation that will make the offering truly disruptive.
Think Beyond Products
Innovations should be about more than products. They can encompass new ways of doing business and making money, new systems of products and services, and even new interactions and forms of engagement between your organisation and your customers. Open innovation champions, especially in fintech should think about creating ecosystems that serve customers a new value proposition at scale. Best example for this is none other than UPI, where the emphasis was on creating an ecosystem to cater various stakeholders seamlessly and it was possible only through association of PSPs to achieve the desired scale.
