Not all innovation is born out of a Eureka moment. On the contrary, successful innovators are known for their structured processes and well laid out best practices. An Infosys-EFMA study of 145 retail banks across 50 countries in Europe, Middle East and Africa reveals a widespread approach towards managing innovation, with little in common between the goals, structure and composition of their innovation departments. And while there is nothing to suggest that having a department to manage innovation improves its chances of success, none of those teams have been disbanded either. 
  
But best practices are another story altogether. Nielsen has found that companies following best practices earn 650% more revenue from new products and services vis-à-vis those that don’t! Another research firm says that leading innovators track and measure the performance of new products, promote a culture of innovation and ensure that their staff have the requisite skills.

This is reinforced by a McKinsey global survey which concluded that companies which earn high returns on innovation use a number of measures to evaluate both inputs and outputs of innovation. What about banking? Metrics such as overall revenue growth, earnings from new products and services, and customer satisfaction improvement are rarely used, if at all, by banks, which of their own admission even find it hard sometimes to define what constitutes innovation. But with the exception of West European institutions, most banks in our survey believe that they have become more innovative in the past year. Using an Innovation Index on a scale of 1 to 5, with 5 being ‘very high’ level of innovation on 5 dimensions – products, channels, processes, CRM and customer experience – Central and East European banks judged themselves the most innovative, with a score of 3.57. Interestingly, only West European banks rated their strength in CRM and customer experience-related innovation higher than their self-assessed overall innovation rating of 3.22, probably due to the fact that there are few product and process innovation opportunities in their mature markets.

Even now, only a few banks are considering employing innovation metrics or a scorecard to track the success of future efforts. Apparently, one of the key traits of leaders of innovative companies is the ability to ‘associate’ that is, connect ideas from different fields to solve problems. I think this is the time for banks’ top management to make an association between best practices employed by other industries and their own innovation-related challenges.