Financial services innovation hubs go by many names, but at their core, they're focused on the same thing: finding new technology solutions that the participating firms can use to improve their customer service and daily operations.
That requires teamwork. Financial services institutions often have multiple hubs that are physically separated from each other as well as from corporate head offices. Despite that separation, innovation teams are in constant contact with each other and with employees in more traditional banking and insurance channels.
"The initial point of the lab being outside of the bank was not for it to necessarily operate with impunity or outside of the organization with no connection," says Tim Hogarth, vice president, innovation framework and strategies with Toronto-Dominion Bank (TD). "The intention was for them to allow a space for the bank to visit and collaborate and work."
In fact, more than 1,000 TD employees have visited the bank's three innovation hubs. This contact between businesses and their innovation teams is crucial to the work being done at these hubs. In fact, many of the products that come from the hubs start out as a conversation between an employee of one of the traditional business channels and the innovation team.
For example, a team with Toronto-based Manulife Financial Corp.'s Red Lab has built a prototype of an app with communications tools based on such a conversation.
"One of the executives asked, ‘How can I add voice to my app?'," says Xavier Debane, vice president, innovation and business development, strategy, with Manulife. The team facilitated that through the use of artificial intelligence (AI) technology and the help of two start-up companies. (Red Lab is located in Communitech Corp.'s innovation centre in Waterloo, Ont.)
An interest in an emerging technology, such as AI, is another way that projects are chosen at innovation hubs. For example, innovation hub teams often meet with other companies and start-ups and conduct research on technology that's being used both inside and outside of financial services.
"We're going out into the world and looking at what is new and [at] developing technologies, what the new practices [are], what the new start-ups [are] that are launching interesting things most often in the financial services space," says Debane.
From those discussions, the innovation teams brainstorm ideas and then work to build a prototype of a new technology platform, app, or communication tool. This process can happen quickly and teams may be able to produce a rough prototype within a few weeks — or sometimes days.
That initial prototype is a long way from any kind of final product, however. The initial design may go through hundreds of versions as it is reviewed and tested repeatedly by clients, the business and the innovation hub team before finally being released to the public.
Some of these designs may not even lead to a final product. Hogarth notes that TD's innovation teams are constantly coming up with ideas but that few of those projects ever make it to the public — which is how it should be.
"Even if we don't actually [bring] them to market, we sometimes see immense value just from the learning," says Hogarth. "If we go off and try an idea and it turns out after two weeks it's just not a good idea, that's a great outcome."
Eventually, ideas that are deemed viable are taken out of the hands of the innovation teams. As the product or platform moves beyond that initial idea phase, it will often be passed on to another team in the parent company's innovation hub network or to an internal technology team.
In some cases, an innovation team may not even be working on a specific product. Sometimes, a team dedicates its time to learning more about new technology that may have various uses, such as AI and blockchain. In fact, some of Royal Bank of Canada's (RBC) innovation labs even partner directly with universities as a means to help develop the science behind technology that may be applicable to the industry in the future.
"We are investing in science and research because we think we can design our own techniques and technology that will be unique," says Gabriel Woo, vice president, innovation, RBC. "We think that to truly innovate, we can't just be taking technology that's already been built for some other reason and then trying to adapt it for our use."
Up next: What innovation hubs mean for financial advisors.