10:05 pm - Monday December 18, 2017

Unconventional thoughts

I sympathize with the present day inventors who claim great inventions. Their so called great inventions do not see the light of the day, after they announce over the media. I have some questions to ask.

– What went wrong with such inventors and their inventions?
– Where to start ideating for successful inventions?
– Where to breed such inventions?

Possibly our inventors focused mainly on what they could offer instead of what the users wanted. Possibly our inventors tried to generate a new concept or idea and tried to sell them.

Invariably all successful great inventions addressed then existing pain or problem areas and tried to innovatively address the ‘unimpressive’ solutions to them. Some were thus in fact just an improvement to existing processes and/or products. Still they succeeded.

An ideal approach for innovation process should address customer focus, cost focus and regulation affects.

The innovators in the financial industry initially attempted at reducing transaction and information costs, search cost, portfolio selection cost, monitoring costs, risk management costs and liquidity costs. Great scope existed then. (Even now?)

Some of the key challenges still faced by financial institutions are:

– Reduce cost of acquisition of new customers
– Retain credit worthy customers
– Maximize profit contribution per customer
– Optimize fee income and interest income
– Reduce cost of delivering the best people service
– Quality at low transaction cost
– Maintain a high quality portfolio

Regulation also plays a major role in innovation as its affects are to be provided for in addition to customer focus and owners’ cost concerns.

Our financial institutions will need to segment markets and build up in depth knowledge of customers, Develop wide range of demand driven products and services, Leverage on appropriate technologies and Develop multi channel networks for delivery of products and services.

You name any innovation effort in financial industry. It will fall under any one of these major areas.

The cluster approach is the ideal approach to innovation efforts. This applies very well to financial innovation efforts. Clusters are geographic concentrations of interconnected parties, specialized suppliers, service providers, “financial technology companies” and associated institutions. (Original concept adapted from Michael Porter who popularized the concept in his book The competitive Advantage of Nations published in 1990). Clusters tend to increase the productivity of their constituent companies, drive innovation in the industry and stimulate the creation of new business.

Blends of minds and money produce the best combination for productivity, patents and economic growth. Our venture capitalists have a sure role to play in innovation efforts. I know some very good ideas could not be taken to the next level, just for the sake of initial seed money. They are not spotted by the VCs or the promoters of the ‘ideas’ are afraid to market their ‘ideas’ to attract investment. Our venture capitalists could make efforts to provide an enabling environment!

Well. You may have something more to add to this lengthy list.

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