What shapes can innovations take in the banking sector.ppt

1. 1
Véronique Favre-Bonté
Elodie Gardet
Catherine Thévenard-Puthod
What shapes can innovations take in
the banking sector ?
The case of retail banking
ICICI 2008 Pays de Savoie, FRANCE

2. 2
• Services remain the "poor relative" of the literature in
management of innovation (Gallouj and Gallouj, 1996;
Dumont, 2001).
• The results of researches in management of innovation
appear hardly transferable to services (Sundbo, 1997) :
– the main criteria for measuring innovation in technology (such as
number of patents or Research & Development budgets) do not
seem to be valid measures in services (Sundbo, 1997 ; Gallouj et
Gallouj 1996);
– innovation in services is often less tangible, more human and
relational than technological (Warrant, 2001; De Jong and
Vermeulen, 2003).
The starting point of our research
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION
• Heterogeneity of services  focus on a single sector :
the retail banking sector.

3. 3
• Some researchers recognize that banks are
able to innovate (Reidenbach et Moach, 1986;
Reidenbach et Grubs, 1987; Näslund, 1986).
• But they focus either :
– on the development of new services (NSD)
(Athanassopopoulo et Johne, 2004 ; Menor et Roth,
2006),
– or on the impact of technological progress on the
functioning of companies (Barras, 1986 et 1990 ;
Kamarkar, 2000 ; Ding et al, 2007)
they adopt a fragmented view of innovation
A literature review of innovation in the banking sector
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION

4. 4
• to better define what banking innovations
cover (What shapes can innovations take ?…)
• to show that there are several categories of
innovation in retail banking,
• and to propose a typology.
The objective of this article is
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION

5. 5
Proposal of a retail banking typology
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION
Degree of novelty
Incremental
Innovation: Already
existing components,
but either improved or
recombined
Radical
Innovation :
New for the firm
Radical
Innovation :
New for the
competitive
environment
New service
(= new offer)
Teller
Physical
medium
Customer
participation
Support
functions,
information
system
Front
office
Back
office
SERVICE’S
COMPONENTS
-SUBJECT
ON
WHICH
INNOVATION
IS
+ +++
++

6. 6
• The study case of a french retail bank.
• Our choice : The Crédit Agricole :
– The first French credit institution (over 25% of market
share since its acquisition of the Credit Lyonnais).
– Decentralized bank with 41 autonomous regional
entities (Each entity has a certain freedom).
Collection of data and analyses
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION
• Focus on the functioning of one of these 41
regional entities : The Caisse Régionale des
Savoie

7. 7

8. 8
• More than 10 innovations
studied :
Mozaic / Points verts / Produits
Seniors / Nouveau concept
d’agence / Assurance / Produits
frontaliers / Facturation
intelligente / Traitement des
chèques / Scanners / Banque en
ligne / IHM / Nouvelles méthodes
de diagnostic / Square Habitat,
etc.
• Focus on individual
customers (not
professional)
• Interviews :
At the In local
headquarter of agencies
CADS (Crédit
Agricole des Savoie)
More than 10 interviews to understand more than 10
innovations developed over the past decade
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION

9. 9
The Crédit Agricole’s Innovations
TYPOLOGY METHODOLOGY
RESULTS
CONCLUSIONS
INTRODUCTION
Mozaic
Products for seniors
Pacifica
Square Habitat
Products for cross-
border workers
New methods of
diagnosis
Online Bank Green points
New agency
concept
IHM Ergonomics
(automatons)
__
IHM Ergonomics
(Employees’s computer
screens)
Intelligent billing Cheque
processing
Degree of novelty
Incremental
Innovation: Already
existing components,
but either improved or
recombined
Radical
Innovation :
New for the firm
Radical
Innovation :
New for the
competitive
environment
New service
(= new offer)
Teller
Physical
medium
Customer
participation
Support
functions,
information
system
SERVICE’S
COMPONENTS
-
SUBJECT
ON
WHICH
INNOVATION
IS
Front
office
Back
office
+ +++
++

10. 10
 Our typology is not only able to encompass the variety of
innovations (despite their heterogeneity), but also to
distinguish between them.
But :
 we could not find an example of innovation that only
focused on the unique evolution of the degree of
participation of the customer .
 Question : does this type of innovation really exist in a bank ?
 On the front office :
 if the innovations of improvement may relate to only one of the
components of the front office (teller or physical medium),
 the major part of most radical innovations impacts the three
components of the front-office
Result 1 : Relevance of the typology
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION

11. 11
Degree of novelty
Incremental
Innovation: Already
existing components,
but either improved or
recombined
Radical
Innovation :
New for the firm
Radical
Innovation :
New for the
competitive
environment
New service
(= new offer)
Teller
Physical
medium
Customer
participation
Support
functions,
information
system
+ +++
++
Products for
cross-border
workers
Cheque
processing
Result 2 : CASCADE EFFECT OF BANKING INNOVATIONS
TYPOLOGY METHODOLOGY
RESULTS
CONCLUSIONS
INTRODUCTION
SERVICE’S
COMPONENTS
-
SUBJECT
ON
WHICH
INNOVATION
IS
Front
office
Back
office

12. 12
• Banks can develop multiple innovations
(even radical), without any technological
advances.
• There exists in the banking sector many
back office innovations, which, if they
are not visible to the customer, may be
strategic (source of competitive
advantage).
Main results
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION

13. 13
• A bank that wishes to innovate drastically needs to be
able to change the various components of the
service system in a coherent manner (Warrant, 2001).
• A doubt remains on the relevance of research that is
only interested in the Development of New Services
(NSD).
• The cascade effect highlighted in this paper encourages
future researchers wishing to work on banking
innovation to adopt qualitative methods.
Main results
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION

14. 14
In line with De Jong and Vermeulen (2003),
dealing with the process of emergence of
innovations, we propose to further study
these processes of emergence of
innovations, in order to better appreciate
the cascade effect.
Perspectives
TYPOLOGY METHODOLOGY RESULTS CONCLUSIONS
INTRODUCTION

15. 15
Véronique Favre-Bonté
Elodie Gardet
Catherine Thévenard-Puthod
Thank you for your
attention