Executive Summary

Innovation has become a key priority for most banks and asset managers, however really transforming an organization and changing its culture into a more agile, entrepreneurial structure is easier said than done. Today’s digitization efforts of banks mostly focus on client channels and back-office automation, thereby neglecting the creation of new business and revenue models, new innovative products and solutions, and digital content. Wealth management decisions are still predominantly based on expert human judgement. However, by sticking to traditional investment concepts, banks risk losing ground to more innovative new market entrants in the FinTech and WealthTech space and challenger banks. Banks who digitize their wealth management and offer digital solutions in coexistence with traditional ones will capitalize on growth opportunities and strengthen their profitability. In general, innovation has four core characteristics. First, innovations relate to an object like a product, a process or a business model. Second, innovations can either be incremental or radical/disruptive, depending on their potential to change existing products and/or industry structures. Third, innovations require a structured approach to a company’s innovation management capabilities – like incubators, open application programming interfaces (APIs), etc. Fourth, innovations are relevant for companies if they can be transferred to the (mass) market. This part will provide an overview on enterprise innovation models and case studies from leading industry players, taking into account all four innovation areas.

The first chapter in this part ties up with the fourth characteristic and describes how companies need to implement a rigid corporate culture to execute innovative ideas. It argues that innovation is 1% inspiration and 99% perspiration. Thus, it involves different critical success factors like a do-it-yourself approach, involving the value chain and allowing failure.

The second chapter relates to the third core characteristic of innovation and provides an exclusive insight into how a leading European direct bank and a global investment manager face the aforementioned challenges and constantly work on innovating and further developing their service portfolio. It shows how companies can combine incubators, open API infrastructures and intrapreneurship to foster innovation. It also includes invaluable tips on how to empower internal entrepreneurs and visionaries (referred to as “intrapreneurs”), which every organization has.

The third chapter focuses on the first and second innovation characteristics, introducing three general models of innovation: detached, overlapping and embedded. As digital technologies increasingly disrupt the wealth management industry, collaborating with WealthTech start-ups has become a viable approach to identify, validate and scale solutions as a means to stay relevant and compete in the digital age. However, start-up collaborations bring a new level of complexity for incumbents. By following a blueprint of successful corporate–start-up collaborations from other industries, wealth management firms can avoid the pitfalls and focus on achieving the desired outcomes. The last chapter will provide a guide to collaboration and also show the necessity of assessing a firm’s digital maturity.

We hope this part inspires all established players to see how innovation can be fostered in financial institutions globally.