Innovations and a “bubble” problem
People often ask me why I choose to work in such a corporate environment. Where to enforce any innovation is like boxing fifteen rounds with Vitalij Kličko. Because I like long term challenges which influence so many people in our society.
And if some institution is here for nearly 200 years like Ceska Sporitelna, it’s nice to try to help it to be here for some more time.
What is it to innovate in an environment of a dinosaur company? At first, let’s have a look at the innovation types in a bigger detail.
In this famous picture coming from the book Alchemy of Growth, we see three main types of innovations. For me personally, the core innovation which “optimizes existing products for existing customers” stands for a must have more than for an innovation. Adjacent innovation which “expands from existing business into new to the company business” I perceive like the way which every company which stands in front of some kind of threat or opportunity must definitely deal with. And the last one, the transformational innovation, which for most of the people stands for “behind the horizon” one I personally perceive like a real innovation. Because “inventing things for markets that don’t yet exist or developing breakthroughs” is the way how we can help our society to solve a different kind of issues. And it doesn’t matter in which kind of industry. But there is as I call it a big “bubble” problem. For me and many others from our “bubble”, this picture and the innovation distribution makes usually sense. But for example, our bank has nearly two million clients who never used the internet banking. So what for our bubble stands as a core innovation, redesigning the user interface of the internet banking, will for someone definitely be a transformational innovation. So especially when innovating in a large corporation a user should be in the very first place. Yes, still a fiction in many companies. Let’s have a closer look on these three innovation types now.
The core innovation — for example, the company’s core product application redesign. This kind of innovation must be present at every company which takes it seriously and must be continuous. When you look at this situation in a wider focus, and you will be successful for example with converting the non-internet banking users to the active users — the innovation is then quite transformational for you as well, because suddenly you are now more responsible for client’s financial literacy. You do have a bigger impact on public computer literacy and that is not just binding but also a cultural influence. Then even the core innovation could have a wider social impact.
Where is the core innovation even more important is the mobile segment.
Although banks weren’t once invented to innovate they can’t now stand in the behind if they want to survive the age of digital transformation.
So I’m really happy that our bank - perceived like a dinosaur - came with still not such a standard, the instant P2P payment application. Let’s now have a closer look at the most interesting field of innovations in our bank. The adjacent and transformational innovations and also the reasons we’re active in this field.
On the picture above you see our developers portal which we have introduced a year and a half ago: in an attempt to evangelize the OpenAPI banking and to set-up an API economy in the Czech Republic. This is what I call the adjacent innovation. Expanding from an existing business into “new to the company business”. It’s also a long-term evangelisation issue in terms of a big bank because you’re standing in front of an army which as a one man is still saying: “Why should we open our bank?”. You’re answering: “Because by 2018 you will have to”. And you need to be ready to do so, to be the first on the market to integrate other banks into your application. Because they will come, the fin-techs and startups, and they will take your data. We’re talking with the outside community for the last two years, collecting the best feedback which will never come from the inside of the company. And it’s part of our innovation funnel.
That was the adjacent innovations we are working on. Trying to move the sense of the old perception of just a banking house more to the nowadays needed software house. Like for example, ING Netherlands did. Let’s move to a proper transformational innovation we’re on. Have you ever heard about the homomorphic encryption yet? We do have a real demo of the very first homomorphic encrypted API in the World, which we introduced last year in Boston. So what is this magic in a nutshell? For any institution which deals with sensitive data transfer no matter if it is a bank, insurance company or a pharmaceutical company, they all need to mitigate any risk of data abuse. Especially when the client’s data is processing by the third party application. Here comes homomorphic.
Let’s have an example of some personal finance manager application which needs to summarize transactions. Homomorphic Encryption allows you to encrypt the data you’re providing to the third party. Third party application can then perform mathematical operations with these encrypted data without having a single knowledge about any factual numbers, any real client’s data.
The application performs an operation, in this case a sum and the result is still a cipher.
A final client who is the only owner of a private key can then decrypt the sum and display the real number. Voilá magic happened. Harry Potter style!:)
Yes, this is still just a proof of concept but if you just imagine how many possibilities are hidden behind such a principle. How many data abuses could you possible mitigate? And mind this fact: it’s happening and was made in that slow, non-innovative, conservative institution called Ceska Sporitelna!
Innovation was, is and will be one of the most famous buzzwords forever. We're trying to change the sense of it to a real visible work.
