Retail Bankers Know They Need to Innovate: Here's How to Do It

No other industry in recent times has had so many urgent warnings sent their way about the need to change, transform and reinvent as banking has.

For many bank and credit union executives, the response now is: “We get it. But can you show us howwe can become more innovative, because it’s not easy!”

Author and innovation expert Jeremy Gutsche deals with that question every day, and has specific suggestions.

“Everyone has the potential for innovation,” Gutsche strongly believes, “but we all get sidetracked by structure, regulations, brand standards, meetings, budgets, life events and even neurological factors.” Through his exhaustive first-hand analysis of innovation, he knows how to overcome those hurdles.

The N.Y. Times bestselling author — scheduled to speak at The Financial Brand Forum 2020 — is an astute observer of human nature. Having advised more than 300 corporate executives he has learned that successful people, oddly enough, are often the ones most likely to miss out on new ideas. That’s because they cling to past successes and keep repeating the same decisions. That’s never a good strategy, but in today’s snooze-you-lose world it will cause a company to quickly fall behind, Gutsche warns.

“Everyone has the potential for innovation, but we get sidetracked by brand standards, budgets, legacy systems and even neurological factors.”
— Jeremy Gutsche, Trend Hunter

Running Trend Hunter, his “idea-laboratory” website, has given him valuable insights into what it takes to turn ideas into wins. Gutsche also knows about banking having worked at Capital One in his native Canada. While financial institutions face some unique challenges, Gutsche has found in his advisory work for organizations ranging from IBM to NASA to startups that there are many more similarities than differences between different industries.

“It doesn’t matter if you are innovating in fashion, tech, retail, design or financial services,” he states. “Breakthrough innovation tends to follow a similar set of patterns.”

Innovation Hidden in Plain Sight

All his life Gutsche dreamed of starting his own business. It was a passion he shared with his father. While he was growing up the two of them would comb through magazines looking for business ideas. But achieving that goal didn’t come easily or quickly. Even after having successfully built a $1 billion business at Capital One while still in his twenties, Gutsche remained frustrated by not being able to come up with “the big idea” that he could use to launch his own business. He taught himself coding at night and used it to create a website he named Trend Hunter, where people around the world could share business ideas. He was simply hoping one of the ideas posted would be the one for him.

Instead, the site itself, which he launched in 2005, became the idea he had been looking for all along and quickly took off. It has grown beyond his wildest imagination from a couple of hundred thousand visitors to 150 million, generating around three billion views. Gutsche left his banking job at 29 to run Trend Hunter full time.

In 2009, in the wake of the global financial crisis, Gutsche wrote Exploiting Chaos: 150 Ways to Spark Innovation During Times of Change. The book caught the eye of many corporate executives during that turbulent period. This led to a six-year marathon of working with 300 CEOs of brands including Coca-Cola and Microsoft, along with a “handful of billionaires.”

Meanwhile, Trend Hunter kept growing, providing a massive trove of trends and ideas from around the world. While Trend Hunter basically is a media site up front, behind the scenes it’s a giant “idea laboratory” testing the appeal of thousands of concepts.

Gutsche distilled what he learned from his advisory work and from the site into a second book, Better and Faster: The Proven Path to Unstoppable Ideas. It’s not your typical business book, which tends to draw only on major brands.

“I teach the same lessons using an ex-criminal who built a multi-million dollar empire, a cancer-conquering entrepreneur [his sister] who is changing the world, and dozens of ordinary people who made it big by pursuing non-traditional, pattern-based opportunities.”

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Below are four suggestions from Gutsche that bank and credit union leaders can use to stimulate innovation.

1. Mix Hunting with Your Farming

A crucial point from Gutsche’s “Better and Faster” is the distinction between “farming” and “hunting.” The vast majority of business managers “farm” — that is, they repeat whatever led to last year’s harvest. In the process they become loyal, consistent and disciplined.

Whereas the traits of the “hunter” are curiosity, insatiability, and being willing to destroy whatever is holding them or their institution back. In financial services, banks and credit unions are mostly in the farmer category, while fintechs are more akin to hunters. It’s not an either/or choice, however.

“Business leaders are pre-wired to repeat and optimize all of the decisions that led to last year’s ‘harvest’.”

Gutsche believes that financial institutions need a balance of farming and hunting to succeed. But too often the hunting part doesn’t happen. That’s because financial institution leaders are “pre-wired to repeat and optimize all of the decisions that led to last year’s ‘harvest.’ But if you become too complacent, protective or repetitive, you will be disrupted when the market changes. And we are now experiencing history’s highest rate of change.”

2. Search for Clusters and Patterns

Despite naming his website Trend Hunter, Gutsche is not always looking for trends, per se, but for “clusters of inspiration.” “Trends” as a concept is too broad in most cases, he tells an interviewer. Two examples are “the green movement” and “aging Boomers.” To Gutsche, clustering is the art of identifying insights that are meaningful to your customers.

The insights can be products, services or even concepts. Gutsche recommends that banking leaders throw away the first cluster they find. “The human mind,” he says, “is great at finding trends and patterns by creating shortcuts or by falling prey to stereotypes and bias. We try to lighten our mental load by referencing what we’ve seen before and what we know works.” The idea, of course, is to avoid such shortcuts on subsequent clusters.

3. Build Off Your Instincts and Your Personal Interests

Many times a personal interest or troubling situation can breed innovation, though it’s not often recognized. “If something bugs you or triggers your curiosity, pay attention,” Gutsche recommends. “There may be a creative combination of ideas that could turn into a big business idea. And remember that your personal passions and skills could be the rich source of creativity that gets you to that solution faster.”