Barriers to innovation in the banking industry.

barriers-to-innovation-in-the-banking-industryThe only thing that is constant is change. However, it is very hard to implement changes and many a times, there are many businesses that opt to stay in the old ways, some citing the fear of losing the customer base. When it comes to banking, it is very important to stay ahead of the competitors and the only way to do this is by being on the lookout of any kind of change that may arise and be among the first firms to embrace it. Early implementation of change gives you, as a financial institution, ample time to educate all the stake holders. This change is majorly brought by the advancement on technology giving way to innovation. There are several issues that hinder innovation. Some of these barriers are:

  1. The ever-changing technology and the needed skills.

Each and every day, there is a report of the new innovation that is about to hit the banking sector and there is a lot of struggle needed when it comes to incorporating new features especially considering the fact that it is an environment that needs to be very fast in implementation without affecting the normal banking operations and still it doesn’t give a chance to the slow learners.

This is one of the major factors that complicates process of embracing innovation and at the same time meet the demands of the clients in time. As hard as it may seem to embrace the innovation, it is also worthwhile to remember that lack of innovation in the bank operations may lead to a loss in the customer base.

  1. The options available for the future of banking.

It takes time and resources to upgrade the technology in the banking system. This calls for hiring of new, skilled and talented workers as well as building a flexible management and diversity.  There is a lot of pressure from both customers and competitors for banks to improve on their delivery of services by innovation. Despite the challenges that are there and probability of changing to another option in the near future, has been able to stand out from its competitors but giving early communication on the changes they are about to make and how the stake holders would benefit from them. This gives them time to educate the staff and customers on what to expect from whatever innovation option will be available.

  1. The organization structure and the management.

A bank organization structure is very complex and with complexity comes a hard decision making process. This contributes greatly in hindering embracement of innovation as not all members will be in agreement. This is more so evident in the institutions that have branches all over the world that leads to a country innovation development that may differ from the others.

It is recommended that banks should consider partnering with fintech firms in order to create and meet the demands of the current market.