By recognizing entrepreneurial talent and encouraging employees to step forward with ideas, banks get a chance to boost innovation from within
J.P. Morgan’s new In–Residence program will give employees an opportunity to see if their product ideas could be beneficial to the bank, and if they are, for them to be developed in-house.
It follows similar programs by UBS and BNP Paribas to encourage employee entrepreneurship, and also involves bringing fintech (financial technology) start-ups in-house to work alongside bank staff.
Martin Häring, chief marketing officer at Finastra, the recently launched financial services technology company formed by the merger of Misys and D+H, says by recognizing entrepreneurial talent and encouraging employees to step forward with creative ideas, banks are making a concerted effort to boost innovation from within.
“This move by banks nurtures innovation within what is traditionally a corporate environment, and highlights the changing times in which these organizations find themselves,” he says. “It also provides opportunities for creative employees to see their ideas come to fruition. The challenge here is to ensure that the creators feel valued and have a sense of control and ongoing input into the development of their ideas.”
Finastra’s Fusion Reactor program gives employees the opportunity to propose innovative suggestions for new products or services, with successful proposals backed and put into development. An example of a proposal that has come to fruition in this way is FusionCapital Detect, a tool for catching “fat finger” errors in trades.
Beyond preventing employees from leaving to kickstart their own fintechs, Häring believes banks should look upon in-house initiatives as an opportunity to foster creativity internally. But they must also be willing to embrace external fintechs to strengthen their business models.
“It is important to recognize that innovation also happens outside of the organization—it doesn’t just come from within,” he says. “Like us, banks must also embrace the wealth of creativity that the wider fintech ecosystem offers.”
By taking a collaborative approach, J.P. Morgan will help foster an innovative culture, with the added benefit of tying fintechs to its own operations and potentially offering equity to some start-ups.