Embracing innovation

Continual innovation to improve the value we create

In today’s world the temptation is to focus on innovation for innovation’s sake. That is not our approach. We recognise that the ultimate arbiter of value is the customer – our approach to innovation is inherently customer-centric.

We challenge innovators to imagine a better world for customers and clients, and then to go out and test whether their ideas and potential solutions actually resonate with customers and clients. Our aim is to help support and enable innovators to help us to better serve our customers, thus improving their lives. We want all our employees to contribute to the process of radically improving the client experience, by understanding and delivering what matters to our customers.

We believe that to achieve this, we must transform into a learning organisation dedicated to continuously exploring, experimenting and improving.

Why this is important

Continual innovation is necessary to keep up with customer needs and expectations. In addition, the rapid evolution and spread of internet and mobile technologies has precipitated the emergence of new start-up technology companies offering cutting-edge financial service solutions which could potentially erode traditional banks’ market share.

Innovation is about responding proactively as markets, technologies and trends shift. We define innovation as the translation of strategically aligned ideas into sustainable and profitable business models.

Like many large companies, SBG is confronted with a number of issues including:

  • Having an overview of the entire portfolio of innovations.
  • Managing and investing in our core (Stay in the Game) products/services.
  • Managing and investing in new products or services (Win the Game and Change the Game innovations).
  • Transitioning new products or services into the core portfolio; and
  • Exiting from innovations that are not performing well.

We are not afraid to do things differently if it means doing them better, which is why we reformulated our innovation strategy and approach during 2015. The innovation framework we have crafted blends the principles of design thinking, lean innovation, and agile and open innovation. It aims to help SBG develop best practices in product and service development, inform investment decisions and enable human capital through what we call ‘autonomy in alignment’. This increases the individual autonomy of employees, with the understanding that they are responsible for generating customer-centred, commercially viable ideas that help us deliver strategy and vision. We aim to embed this ‘autonomy in alignment’ in the everyday working lives of all employees.

Opportunities and challenges

Opportunities

Design thinking

By embracing design thinking as a discipline, we are learning the power of going ‘outside the building’ – early and often – to engage customers. This means seeing things from the customer’s perspective and developing empathy with customers’ problems to ensure that we understand these. Only once we have achieved this can we design appropriate solutions that will address the issues. Design thinking ensures that we do not jump to premature conclusions. Instead, we validate customer value quickly and cost effectively before designing and building a solution. Our focus is not on the value of the initial innovation idea, but rather on the customer-validated opportunities that derive from the initial idea.

Lean innovation

Lean innovation emphasises that the first job of innovation is to find out whether we are making something customers want. The second, is to identify sustainable and profitable business models. Making products/services that customers’ value is not the same as asking customers what they want. We need to ensure that innovations are commercially viable, while also delivering what matters.

Agile innovation

Our software development methodologies use iterative development. Requirements and solutions evolve through collaboration between self-organising cross-functional teams. We have made strides embedding this capability within Group IT over the past 18 months, enabling fast delivery and continuous improvement of solutions.

Open innovation

Open innovation harnesses the power of mutually rewarding relationships. We partner with organisations of all sizes, and from multiple geographies, to complement our core capabilities and resources. We are engaging with the fintech and data science ecosystem. We are also promoting an open culture of continuous exchange between SBG and developer and communities of data scientists around the world. Our aim is for SBG to be recognised as an open innovation partner of choice. Through our recently launched open innovation lab, we are tapping into external ideas and technologies to inform our innovation process, while also sharing our own ideas and technologies with others.

A balanced portfolio of innovation investment

SBG is committed to investing in a balanced portfolio of innovations that covers a range of different types of innovations:

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The framework set out below helps us manage our resources and investment appropriately, across the life-cycle of each innovation:

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Our approach enables us to respond rapidly to changing customer needs by bringing new products to market quickly and changing concepts that are not working. We pilot new products on a limited, short-term scale. After each stage, a report is presented to an investment committee and the decision is taken whether to proceed or not. Funds are released following the accomplishment of milestones or checkpoints. There is room to fail ‘fast and small’ and move on quickly, using our learning to explore new ideas.

Our User Experience Laboratory gives us the ability to embed ourselves in the customer journey and helps us understand a customer’s issues and frustrations and what technological interventions will best meet their needs. It also allows for cost savings, as testing in such a realistic environment gives us an idea early on whether an intervention will work or not.

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Challenges

  • Innovation requires us to do what has not been done before, which requires high levels of adaptability in managing the associated risks. Changing the culture of the organisation inevitably generates some resistance and discomfort. We are working with employees – including executives – to encourage them to embrace new concepts and approaches. Embedding our innovation approach is a multi-year journey.

Performance overview

  • During 2015 we conducted 26 innovation product/service experiments using the new methods described above, and have taken 13 of these forward to the market validation stage.
  • We launched the Innovation and Design Centre to incubate and accelerate innovative solutions using technology-driven testing. There are three spaces that act as Open Innovation Labs and these centres provide opportunities for employees and external entrepreneurs to pitch ideas that link to our products and services. It offers business support, mentorship, technical assistance, access to markets and commercialisation, and exposes entrepreneurs to our banking teams. Competitions are also run to catalyse innovation, such as the Pathfinders competition that was run in 2015 and attracted finalists internationally and locally (including employees). The finalists were given cash prizes as well as access to Standard Bank business units and the Incubator. This competition allowed us to scout for possible partners as well as engage with the fintech community around the ‘Customer of the Future’.
  • We ran our first Internal Innovation Forum during 2015, where Standard Bank colleagues can share best practices and discuss how they have implemented open innovation in their business units and gain insights from thought leaders on a practical level. This serves to break down silos within the bank and share ways in which innovation can be best executed within a Standard Bank context.
  • Due to innovative energy-efficiency improvements and new technologies across our operations. Our carbon dioxide equivalents (CO2e) are down by 2%, mostly as a result of consuming a reduced 279 GWh ✓ of energy in 2015 (307 GWh in 2014).

Progress in 2015

PBB innovation challenge

In February 2015 the PBB employees were asked to submit their improvement for a chance to win R1 000 000. However, there were a few prerequisites. The improvement had to be more than an idea – it had to have been implemented with verifiable results. Implementation had to have been done in less than three months with little or no IT impact and a minimal cost implication (less than R100 000). In October 2015, 17 semi-finalists presented to a panel of judges who were tasked with selecting the top ten. Focus was paid to clarity, alignment with PBB strategy, novelty and the business benefit of the innovation. In November, the top ten were once again put through the process of pitching their improvements to a panel of judges, where after careful deliberation there were three winners, a first prize, and joint 2nd and 3rd place. The competition garnered 222 entrants and the net benefit tracked for the top 10 finalists were R200 million. The beauty of these innovations is that they cannot be copied by our competitors as they are internally focused with a direct impact to a client, via process efficiencies and changes in ways of work.

Partnering to service emerging businesses

We partnered with FireID, a technology incubator based in Stellenbosch, to launch SnapScan, a product that uses mobile phones and QR codes to provide a service to merchants who do not qualify for point-of-sale machines and who may not have electricity. The consumer loads the SnapScan app onto their smartphone, adds a card (Standard Bank or not) to their profile and then pays a SnapScan-registered merchant by scanning the QR code and entering the amount when prompted by the app. Users require a pin and merchants receive a confirmation SMS, ensuring the system protects both the user and the merchant. Merchants pay a transaction commission fee and are able to cash money using vouchers, and are not required to have a bank account to use the service.

Thinking and acting like a 150-year-old start-up

Standard Bank launched a facility called the PlayRoom, where new technology ideas are developed and tested in January 2015. The facility is located above a Standard Bank branch, making it easy for PlayRoom developers to test new ideas with clients before launching them commercially. The idea is to encourage entrepreneurial thinking among our employees, and to bring together diverse people to spark new ideas. Not everything developed in the PlayRoom will be customer-facing. Some of the concepts created will involve changing the bank’s internal systems and processes to improve overall working conditions and efficiencies.

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