Grow VC Group
  • Home
  • Group
  • Team
  • FAQ
  • Join Us
  • Trainee Program
  • Contact
  • News

Risk Averse Financial Institutions and the Value of Rapid Prototyping

3/14/2018

Comments

 
​The only methodology that yields proven and measurable results is trial and error. No matter the MBAs in the room and the PowerPoint charts and simulations, nothing will compare to trial and error. If we accept this fact, and we should, then the thing to aim for is to maximize the amount of experiments in order to observe and measure what in fact works and yields the result we desire. Move fast and break things, so to speak. 
​
The only methodology that yields proven and measurable results is trial and error. No matter the MBAs in the room and the PowerPoint charts and simulations, nothing will compare to trial and error. If we accept this fact, and we should, then the thing to aim for is to maximize the amount of experiments in order to observe and measure what in fact works and yields the result we desire. Move fast and break things, so to speak. 

How exactly do you do that, when you’re sitting inside a risk averse, global bank that manages trillions of dollars of transactions and funds? And can you ‘break things’ without ending up in an orange jumpsuit? In this post I’ll explore not only why that is possible in a complexly regulated, highly conservative and risk-averse organization, but rather why it’s critical for the survival and competitiveness of such an organization. 

Tom Chi has this now famous talk he does from the early days of Google Glass. After hours of debate about the color of the heads up display (HUD), where the room full of smart, innovative people could not find common ground, a simple prototype was built in an hour yielding a simple result. Smart people argue about the color and with all the smarts, the prototype put an end to the discussion and formed an argument everyone agreed with. The thing with smart people is, they can make a self-serving, factually incorrect argument sound smart by their own vary nature.
 
Separating what you know and what you think you know. 

Unless you are building on real data, you do not know anything. Real data has to be representative and it has to be valid, yet the very concept of rapid prototyping does not require it to be perfect from the start. It simply requires it to be experienced by someone who does not know, what the experiment is or have an interest in behaving in a predisposed way. Realizing that you are wrong is powerful. The way to be less wrong is to launch something and improve. You can only improve when you know how and where you are wrong. That’s important and arguably, that’s the quickest and shortest way to get to being incrementally less wrong over time.

A Word On Culture 

Financial services and especially the largest institutions are risk averse and let’s face it, you want them to be risk averse. Yet all the reasons (excuses) why you couldn’t adopt a prototyping culture in lets say a bank, will fall away when examined closely. 

Everything comes down to design. You don’t want to launch things publicly due to brand risk? OK – launch it internally to another division. Then launch it internally to a second, to a third. Then launch it to an early adopter group, e.g. a partner company. Build up your confidence in your process, design it so it can succeed. What about regulation and risk management? Build that into your process and even more so, into your products. Regulators and risk managers love nothing more than you giving them more granular data, more security and more sophistication. Today’s technology can do that efficiently. Give them a (self-serving) reason to support you.

Culture is important and it’s important to take seriously. Yet it’s crucial to ask questions. Don’t fall into the trap of assuming the way its been done before is correct, just because no one asked questions and even if they have asked questions, don’t assume today is no different than last year. Ask questions and question models, that’s the only way they really improve. 

With Open Banking and PSD2 we are seeing a large scale cultural shift, toward technology-centricity. It is not always comfortable and large institutions are building their talent pools with cross-disciplinary technology competence. This shift is just beginning and the most successful early adopters we have seen so far in financial services, are those that have embraced it head on and made a clear commitment. Pulling Goldman Sachs into retail after 147 years of no retail operations and launching the no fee personal lender platform Marcus shows commitment and an organizational bravery tackling new challenges. Surely it was a calculated and tested modeling that led to the launch, after several pilots and prototypes internally, but in the market it looked quite smooth. 

That’s the thing. Move fast and break things, but manage what you break and who’s looking. Financial services are moving toward an API ecosystem at a fast pace with catalysts like PSD2. Embracing the change requires a different thought process and models, but the rewards may be enormous. 

The article first appeared on the Difitek Blog.
Picture
Comments

    About

    Est. 2009 Grow VC Group is building truly global digital businesses. The focus is especially on digitization, data and fintech services. We have very hands-on approach to build businesses and we always want to make them global, scale-up and have the real entrepreneurial spirit.​

    Read the latest Grow VC Group  FinTech, distributed and crypto finance, and blockchain report
    Read the AI, Asia and FinTech report - including comments about potential trade wars.
    Download

    Research Report 1/2018: Distributed Technologies - Changing Finance and the Internet 


    ​Research Report 1/2017: Machines, Asia And Fintech:
    Rise of Globalization and
    Protectionism as a
    Consequence


    Fintech Hybrid Finance Whitepaper

    ​Fintech And Digital Finance Insight & Vision Whitepaper


    Learn More About Our Companies:
    • Difitek
    • Prifina​
    • RE Bearing
    • Token Index Fund
    • Startup Commons
    • Lost in Translations
    • Robocorp
    • Nodi Liber​

    Archives

    January 2023
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    October 2020
    September 2020
    July 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    September 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016

    Categories

    All
    Difitek
    Grow VC Group
    Robocorp

    RSS Feed

Digital Intelligence Globally
Picture
© 2009-2023 Grow VC Operations Ltd. All Rights Reserved.
  • Home
  • Group
  • Team
  • FAQ
  • Join Us
  • Trainee Program
  • Contact
  • News