It was heavily discussed by the 200 senior financial risk, tech and operations decision-makers who responded to the survey documented in our Great Reset white paper. In this article, the final of my three-part series on the white paper for UK Finance, we’ll take a closer look at this theme.

NatWest’s Brendan Murtagh said that all parties are experiencing major shifts in perspective: “Our customers are going through great change, and they need support. They are using new tools, as are we.” We learned that these customers have exacting technical standards, and that “staying current on digital solutions” is vital.

To meet their clients’ demands, organisations have to be creative and innovative. When it comes to hitting their financial targets, 70 per cent considered innovation to be either very important (47 per cent) or extremely so (23 per cent). Nearly a third of those participating in our survey have set up specialised innovation hubs to take ownership of new ideas.

Overcoming the barriers to innovation

Even so, innovation is one of the hardest things to get right, and it can be especially difficult for the larger financial firms, which are often less flexible and nimble than start-ups or SMEs. Many have difficulty in obtaining senior approval to move these ideas forward – over a third (35 per cent) said the main barrier to automation is the lack of buy-in from the boardroom.

Commitment to innovation must be shared by the firm’s senior management, with buy-in across the organisation and tech professionals as a key strategic component – ideally with a chief information officer or chief technology officer on the board. There must also be sufficient investment and belief to move ideas from blueprints and prototypes to operational systems.

Where internal innovation is considered to be neither affordable nor practical – for example, the main obstacle for 16 per cent of firms is that there is insufficient proof of a return on investment – third-party partnerships can be the right answer. They can provide specialised expertise and solutions in areas like APIs, data analytics and AI, and help make persuasive cases to the board on tech investments.

Priorities for innovation partnerships

What banks want above all from their partners is flexibility (29 per cent) and robustness (20 per cent). “Flexibility is more front and centre,” Brendan Murtagh told us,“ and the ability within partnerships to change things within reasonable parameters has become more important.” Robustness in third-party providers means adapting readily to evolving requirements and being there for the long term.

Compliance issues can also be a barrier to creativity, as was the case for 34 per cent of respondents. According to Divya Aggarwal, global product manager for a leading digital bank, “the legality of rolling out the new initiative plays a role in the decision of whether we move ahead or not”. This requires external partners to be closely aligned with the bank’s standards and thinking, for example sharing a mutual emphasis on regulatory compliance.

Partnerships in the real world

Partnerships are often more complex than outsourcing to one supplier or buying a package from a single vendor. José-Maria Buey told us how Deutsche Bank has partnered with SWIFT, fellow banks, and multiple fintechs to mitigate fraud risk for its clients. They collaborated to create an innovative solution that “allows clients to validate a beneficiary account in real-time before they execute a payment”.

See below for two other blog posts exploring Confirmation’s The Great Reset white paper.