The document discusses innovation in the financial services industry. It provides examples of business model innovations like Prosper and Grameen Bank that connect borrowers and lenders online. It also discusses product innovations like identity theft protection services and mobile banking services innovations that allow transactions via text message. The document advocates that technology enablers and an innovation roadmap can help drive innovation strategies within organizations.

1. e-Business Innovation Report Research Conducted by: Brant R. Carson (20), Vincent Nazih(20), Chirag Pathak (18), Eric Quon-Lee (18) Innovation Model: Tom Vassos [email_address]

3. The Innovation Story

4. “ We will fight our battles not on the low road to commoditization, but on the high road of innovation.” Howard Stringer, Chairman & CEO, Sony Corporation Oct. 4, 2005 “ Government support for scientific research is not enough. We also need to make sure that scientific innovation gets translated into applied uses in business.” U.K. Prime Minister Tony Blair "Constant reinvention is the central necessity at GE... We're all just a moment away from commodity hell.“ Jeffrey Immelt Chairman and CEO, GE “ More and more CEOs are adopting an innovation agenda.” Sam Palmisano, IBM CEO “ Electronics Industry Lacks Innovation, Philips CEO Charges” EE Times , Sept. 27, 2005 “ Continuous innovation and the full, unfettered expression of human capacity are indispensable to Japan's economic rebirth and revitalization.” Japanese Prime Minister Junichiro Koizumi “ Innovation is an essential component of corporate survival.” Anne Golden President and CEO Conference Board of Cda Source: IBM Innovation has become an important part of the agenda for senior public and private sector leaders

8. CXOs recognize innovation as the most important capability for competitive differentiation and growth Source: March 2005 McKinsey Quarterly survey of 9,345 global executives Ability to manage increasing Regulation costs Ability to allocate capital Ability to manage a global organization Ability to allocate the best talent Ability to innovate Percentage of executives that consider each capability important for growth

10. Several sources of innovative ideas are actually external to the organization Source: IBM Employees Business Partners Customers Consultants Competitors Associations/Trade Groups Internet Sales/Service Units Internal R&D Academia * Respondents could select up to three choices External Sources of Innovation Percentage of Respondents Companies that relied more on external sources for innovative ideas outperformed other companies.

11. The Innovation Roadmap

12. Technology Enablers Innovation Enablers e-Business Strategy Execution Strategy The Innovation Roadmap is a comprehensive framework for building a strategic innovation plan that will drive value to any organization. It includes the creation of an innovation strategy, an execution strategy and an e-Business strategy – enabled by innovation enablers and technology enablers. Innovation Roadmap Innovation Strategy

13. Technology Enablers Innovation Enablers e-Business Strategy Execution Strategy The Innovation Roadmap should be driven jointly by the IT department as well as various “Lines of Business”. The Lines of Business tend to have more input into the Innovation Strategy and the Execution Strategy, while the IT department tends to have more input into the Innovation and Technology Enablers. Innovation Roadmap Innovation Strategy LOB* IT LOB & IT * LOB = Line of Business

14. Business Model Innovation Product Innovation Operations Innovation Business Function Innovation Services Innovation Technology Enablers Innovation Enablers e-Business Strategy Execution Strategy Innovation Roadmap – Innovation Strategy Innovation Strategy The Innovation Strategy involves an exploration of various forms of innovation, from Business Model Innovation to Operations Innovation.

15. Leadership Governance Collaboration Change Management Communications Organization Culture & Rewards Technology Enablers Innovation Enablers e-Business Strategy Execution Strategy Innovation Roadmap – Execution Strategy The Execution Strategy involves a comprehensive approach to executing an innovation plan – from leadership and governance considerations, to change management and communications plans.

16. Foundation Phase Exploitation Phase Strategic Transformation Phase Innovation Phase Business Extension Phase Technology Enablers Innovation Enablers e-Business Strategy Innovation Roadmap – e-Business Strategy The e-Business Strategy involves an exploration of various forms of innovation that are tied to various e-Business functional areas such as e-Learning, e-Purchasing, e-Mail Marketing, Viral Marketing, e-Marketplaces, Online Communities, One-on-One Personalization Strategies, etc.

17. Conferences & workshops Flexible IP rights Military commercialization Education gone public The New Value Chain Technology Enablers Partner collaboration Influence 2.0 Innovation Enablers Innovation Roadmap – Innovation Enablers Innovation Enablers are tactics that can be deployed to cultivate the ongoing formation of hundreds of innovative ideas throughout an organization. Many enablers used in other industries have been applied in the global financial services industry or should be considered in the near future.

18. Innovation Roadmap – Technology Enablers Technology Enablers are technologies that can be deployed to drive specific innovative applications for competitive advantage and/or generating a Return on Investment. Many enablers for other industries have been applied, are in the process of being applied or should be applied in the global financial services industry. Social networking Video Net neutrality Blogs 3G & IMS Wikis Technology Enablers

19. Innovation Strategy

20. Business Model Innovation Product Innovation Operations Innovation Business Function Innovation Services Innovation Technology Enablers Innovation Enablers e-Business Strategy Execution Strategy Innovation Roadmap – Innovation Strategy Innovation Strategy The Innovation Strategy involves an exploration of various forms of innovation, from Business Model Innovation to Operations Innovation.

21. Product Innovation Business Model Innovation Services Innovation Operations Innovation In the global Financial Services industry, there are many innovative companies. Business Function Innovation

40. Marketing Innovation Strategy Innovation Sales Innovation HR Innovation R&D Innovation Purchasing Innovation Finance Innovation Organization Design Innovation There are many innovation pioneers across many functional areas as evidenced by these examples. Business Function Innovation

41. Engineering Innovation Logistics Innovation IT Innovation PR Innovation Investor Relations Innovation There are many innovation pioneers across many functional areas as evidenced by these examples. Employee Satisfaction Innovation Production Innovation Business Function Innovation

59. Ferratum offers a seductively simple concept of granting small 15 day loans by sms message, which can be requested by mobile. Ferratum provides the capital and charges a fee of 25% of the loan value for this service. IT Innovation Source: http://www.psfk.com/2007/08/ferratum-offers-loans-by-sms.html Customer sends a request for money over sms and provides an account number, date of birth and address. Ferratum charges a 25% service fee for providing the loan which must be returned in 15 days. Customer can collect the money within 10 minutes.

65. Innovation Execution Strategy

66. Leadership Governance Collaboration Change Management Communications Organization Culture & Rewards Technology Enablers Innovation Enablers e-Business Strategy Execution Strategy Innovation Roadmap – Execution Strategy The Execution Strategy involves a comprehensive approach to executing an innovation plan – from leadership and governance considerations, to change management and communications plans.

67. Change Management Culture & Rewards Collaboration Communications Leadership Governance Organization There are many innovation pioneers across many areas of execution as evidenced by these examples. Execution Strategy Innovation

70. Change Management The Industrial Credit and Investment Corporation of India (ICICI) implemented “Five S” which is a change management process. Its implementation resulted in 50% cost savings at one bank branch in Mumbai. Source: http:// ebusiness.icicibank.com/imarkets/products/treasury_banking.asp?prod=tsbk ; Case Study 10 Pages, Change Management @ ICICI : case study, Case Code , 2002.Centre for Management research order number :HROB008 "Five S is a workplace transformation exercise. When we implemented it across the organisation, it …[had] many tangible benefits," says Chanda Kochhar, executive director, ICICI Bank.

71. Culture and Rewards Source: www.db.com/careers/en/507.html http://www.cambridge-na.com/files/IR_downloads/Information_memorandum.pdf With the “Total Reward Philosophy” the bank is able to retain highly skilled workers by providing them with excellent benefits and compensation based on teamwork and innovation. Deutsche Bank has a “Total Reward Philosophy,” which is geared toward a culture of performance and innovation. Rewards are aligned with the bank’s core values of teamwork and innovation. Employees are compensated significantly for innovative ideas.

73. Leadership The implementation of innovation needs a committed senior leadership to guide through resistance to change introduced by innovative ideas. Source: http://www.privatebankinginnovation.com “ We have all sorts of exemptions in order to get things done and communicate our projects to the executives” Tim Hanlon, RBC Former CEO of HSBC Private Banking (Suisse) SA says maintaining a new product for entrepreneurs was one of the key criteria in his succession selection

75. Organization Lloyds Bank (UK) implemented a unique model at the bank for distributed innovation where all innovative ideas were encouraged throughout the organization, filtered to a consultant and then implemented. Source: Bob Garratt, Organizational change, learning and metrics: hard and soft ways to effective organizational change, Development and Learning in Organizations, Volume 19, pp-4-6, 2005. There was no division devoted to thinking about or implementing innovation, no R&D department, rather ideas for innovation came in from all departments and filtered through a consultant. Lloyds is an example of a slow organizational change model where the entire organization in involved, it is not possible to develop this culture in a single day or month.

76. e-Business Strategy

77. Foundation Phase Exploitation Phase Strategic Transformation Phase Innovation Phase Business Extension Phase Technology Enablers Innovation Enablers e-Business Strategy Innovation Roadmap – e-Business Strategy The e-Business Strategy involves an exploration of various forms of innovation that are tied to various e-Business functional areas such as e-Learning, e-Purchasing, e-Mail Marketing, Viral Marketing, e-Marketplaces, Online Communities, One-on-One Personalization Strategies, etc.

78. The e-Business Roadmap Exploitation Phase Innovation Phase Business Extension Phase Strategic Transformation Phase Foundation Phase The e-Business Roadmap can be used to explore a broad range of potential innovative e-Business ideas Global Niche Marketing e-Channel Strategic Alliance Future Innovation e-Marketplace Mobile Human Interaction Automated Interaction Database Application E-Business Transaction Workflow Process e-Commerce Community Outbound E-mail Viral Marketing Personalization Customer Relationship Knowledge Management Traffic Generation Communications Infrastructure Collaboration Research Competitive Research Market Research e-Learning Assessment Strategy Organization Infrastructure Reach e-Branding Purchasing Publishing

79. Innovation Enablers

80. Conferences & workshops Flexible IP rights Military commercialization Education gone public The New Value Chain Technology Enablers Partner collaboration Influence 2.0 Innovation Enablers Innovation Roadmap – Innovation Enablers Innovation Enablers are tactics that can be deployed to cultivate the ongoing formation of hundreds of innovative ideas throughout an organization. Many enablers used in other industries have been applied in the global financial services industry or should be considered in the near future.

94. Innovation Roadmap – Technology Enablers Technology Enablers are technologies that can be deployed to drive specific innovative applications for competitive advantage and/or generating a Return on Investment. Many enablers for other industries have been applied, are in the process of being applied or should be applied in the global financial services industry. Social networking Video Net neutrality Blogs 3G & IMS Wikis Technology Enablers

101. Conclusions / Recommendations