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The 2nd Innovation for Financial Services Summit will be held in Luxembourg, Grand-Duchy of Luxembourg on 19-21 September 2012. Organised by the Public Research Centre Henri Tudor in partnership with ISPIM, the International Society for Professional Innovation Management, this Summit brings together international academics and practitioners to discuss the various challenges linked to innovation in, and for, financial services. In an interview with LFF, Anne-Laure Mention, Head of the Research Unit, Centre de Recherche Public Henri Tudor, speaks about the “not-invented-here” syndrome, the social fabric and external sources of knowledge.
What are the major trends in financial innovation that will be covered during this year’s conference?
Dedicated luminary sessions on ‘Innovation in Practice’ will be organised and we have three contemporary topics: firstly, a speaker from Mpulse whose mobile payment solution Digicash won the jury prize of the Accenture Belux Innovation Awards for the Financial Services Sector 2012; secondly, a speaker from SWIFT (whose “Innotribe” initiative got shortlisted for the Accenture Belux Innovation Awards for the Financial Services Sector 2012); and thirdly, the Head of Accenture Innovation and Research Program “Next generation bank” will introduce the VISION project, focusing on analytics in natural language, applied in the specific context of a French financial institution.
Mobile banking and payment solutions are deemed to be the rising star in the area of innovation for financial services. I emphasise the importance of knowing the customer’s behaviour as a guiding tool for innovation. The origins of financial innovation should be the needs of the customers. A multinational financial company will illustrate customer-centricity through technology in financial services during a keynote speech.
Another example of innovations aimed at meeting customer needs is the increased integration of social networks for the provision of financial services. It has a multitude of advantages such as reduced costs and increased time saving. Financial services through social networks can actually achieve a higher level of transparency.
Given the current economic and financial crisis, should the financial sector be spending more time and money on financial innovation?
Financial innovation has been largely disparaged these days. According to Nobel Laureate Paul Krugman, it is “hard to think of any major recent financial innovations that actually aided society”. This criticism seemingly concentrates on product-based innovations. Yet financial innovation covers a much wider spectrum than this product-focused approach may suggest. Financial innovations encompass new products (e.g. adjustable-rate mortgages, exchange-traded funds that follow socially responsible investment strategies or are sharia-compliant, social impact bonds), new services (e.g. e-banking, mobile banking solutions, online securities trading), new production processes (e.g. credit scoring models, electronic money processing, electronic record-keeping for securities, implementation of SEPA – Single Euro Payments Area), and new organisational forms (e.g. branchless banks, alliances with telecommunications providers and mobile network operators, internal improvement projects.
Firms that hope to reap benefits from opening up their innovation process should consider the following essential issues when designing their strategy. On the inbound side, financial firms should bear in mind the accrued importance of information and communication technology for product, service, process and organisational innovations. Random partner selection is pointless in an open innovation strategy and firms should identify partners that possess complementary knowledge assets. Combining respective knowledge bases should enable the introduction of novelties to the market, in the form of products or services that are valuable to customers and distinct from those that competitors can offer. Another vital aspect is to overcome the “not-invented-here” syndrome that typically affects firms, which are not culturally prepared to welcome and exploit externally generated knowledge and ideas. Management has an essential role to play in promoting an open innovation culture and create appropriate conditions to ensure that individuals become receptive to external sources of knowledge.
How do you see the role of Tudor in this development?
Since its creation in 1987, the Public Research Centre Henri Tudor has been committed to creating a link between research and the community in Luxembourg and to strengthening the “economic competitiveness” and “social fabric” of the country. Under this general mandate, there are a number of objectives that the Public Research Centre Henri Tudor needs to achieve, one of which is to “permanently strengthen the capacity for innovation in companies and public organisations”, and another is to “contribute to the production and transfer of knowledge and the international reputation of the scientific community in Luxembourg through scientific excellence.” Hence this Summit on Innovation for Financial Services practically embodies the Centre’s mandate and objectives. There is a clear role for Tudor to play in the further development of Luxembourg as a leading financial centre. CW