When it comes to having problems, banks lead the way. Legacy technology, serious red tape issues, siloed divisions and business cases that take years to actually implement are all disturbing the FI innovation process.

But there is hope. In the last few weeks, Bank Innovation has been seeking out financial services innovation experts to share tips on what FIs should keep in mind when addressing new technologies. Here are a few salient points that we discovered in recent conversations:

• George Colwell, president of Loki Consulting Inc.

Before banks get swept up in the glamor of payments innovations, they should first get their data under control, recommends Colwell. If the data of an institution “is all over the place,” Colwell says a bank “can’t put lipstick on it to make it better.” In other words, if a bank prioritizes data issues, Colwell believes other efforts, like mobile payments, will be easier slam dunks.

Another lesson FIs still need to learn is recognizing that nontraditional  companies — i.e. Apple, Facebook and Google — are potential threats to their business.

“[Banks] are unable to see themselves becoming irrelevant,” Colwell tells Bank Innovation. “They don’t see the impact of the startups.”

That shortsightedness is problematic, especially when such fintech “outsiders” start to lend, he points out. “You can’t fight for customers who don’t want to use your services.”

• David Fish, senior analyst with Mercator Advisory Group

Though Fish identifies “big data” as an ongoing banking trend in 2012, he says the innovation requires a lot of clarity.

“Big data is a messy topic,” Fish tells Bank Innovation. “There’s a lot of potential, but big data needs to be approached with extreme caution. …There needs to be some kind of discussion around best practices, and privacy needs to be a big part of it.”

• Cherian Abraham, principal analyst with Drop Labs

In getting Americans to pay with their phones, perks matter.

“Plastic is not broken,” Abraham tells Bank Innovation. “Plastic is pretty much entrenched in [consumers] way of life. Shifting off [the payment form] will be a huge gamble, but it will happen for sure.”

Abraham, like others, view loyalty and rewards as the strategy to get Americans to ease off their plastic payment habits.

“There are unique ways to leverage existing [smartphone] functionality to transact at the retail level, but it all boils down to what has the least amount of friction for POS and seamless customer experience.”

• Jay Bhattacharya, chief executive of Zipmark

Defining financial services is becoming much more complex.

“There’s just a ton of activity in fintech and the definition of fintech is broadening,” Bhattacharya tells Bank Innovation.

As the amount of players increases, the innovation market becomes more granular.

Want more tips? Attend Bank Innovation 2012 to explore new ideas, products and strategies that will shape the future of banking. Our event will take place March 28-29 at the W San Francisco.