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Managing innovation at incumbents: lessons from KBC and BT


04 May 2016

Global Services

Blogs by author: Global Services, We’re a leading global business communications provider


Banks have had their fair share of challenges over the past decade.  Those who survived the financial crisis are now facing the threat of digital disruption, and like most incumbents in nearly every industry, including BT, are having to take innovation and digital transformation very seriously.

KBC Bank, one of Belgium’s largest universal banks with retail, business banking and insurance activities, is no exception. In this interview Freddy Van Bogget, Innovation Manager for KBC’s banking products, and Pascal Cuppens, Head of KBC’s innovation centre ‘Surf Studio’, explain the concept and inspiration behind KBC’s innovation strategy. Peter Niersch, KBC’s Account Manager at BT Global Services, also joined the conversation.

Dawn of a new world

In 2012, as the financial crisis calmed and people began seeing light at the end of the tunnel, KBC Bank realised that they needed to start doing things differently to face a rapidly approaching digital future. The world had changed.

Firstly, the bank appointed innovation managers in all the key divisions – including Freddy Van Bogget for banking products. Their job descriptions were still unclear, but there was consensus on what they shouldn’t be doing: create new products. As Freddy explains; “We already had too many products. Hence from the start we were convinced that we needed to focus on the societal needs that already existed and look for more interesting, innovative ways of interacting with customers.”

Not only did the interaction with customers deserve attention; equally important was the internal communication and teamwork across traditional departmental boundaries. Freddy: “We wanted to stimulate collaboration among people who may not have known each other yet, to make such contact less coincidental.” Interestingly, KBC’s current innovation program has its roots in such coincidental teamwork: Freddy happened to know Pascal Cuppens, who hailed from the bank’s IT department, and asked him to join the innovation initiative.

Innovation at KBC – Freddy Van Bogget and Pascal Cuppens

Innovation at KBC – Freddy Van Bogget and Pascal Cuppens

Adastral Park: a source of inspiration

Freddy: “Our CEO, Johan Thijs, argues that you have to let change happen organically. You can’t force it, or ‘structure’ change. You have to give change its own drive and you can best accomplish that by giving it the right impulses.”

One such impulse came in 2013 when Peter Niersch, KBC’s Account Manager at BT Global Services, invited Freddy and some of this colleagues to Adastral Park, BT’s Global Research and Development Headquarter.  Freddy: “BT is a very inspiring example. They too have had to make a radical transformation, from their roots as a state-owned telco to one of the world’s most innovative global companies. The total concept of how they manage innovation is very inspiring.”

Digital transformation is something that concerns everyone in the organisation: everybody has to learn to surf the unstoppable waves.

That first visit to Adastral Park confirmed some of the key ideas that were taking shape at KBC. One such principle that KBC adopted was BT’s customer-driven approach to innovation.

As Peter explains; “BT departs from the need of the client and only then do we begin exploring how we can address that need in new ways. There has to be at least one business manager who sees a clear need and opportunity to make money with it. We do not start an innovation project without such a sponsor.”

Surfing time

Pascal Cuppens – Head Surf Studio at KBC on LinkedIn
Pascal Cuppens – Head Surf Studio at KBC
on LinkedIn

Tactically too there are many similarities in BT’s and KBC’s approach. KBC’s Surf Studio, currently headed by Pascal, is the overarching concept and brand of KBCs innovation program.  Surf Studio’s tagline is: “You can’t stop the waves but you can learn to surf.” 

The main idea here is that digital transformation is something that concerns everyone in the organisation: everybody has to learn to surf.  Freddy and Pascal have organised Surf Studio’s activities in two broad domains: facilitating innovation and doing innovation. As a physical infrastructure, KBC’s Surf Studio has many parallels with BT’s Customer Experience Centres and other facilities at Adastral Park. A key principle, in that regard, is that the innovation process must be as tangible as possible, and that means creating physical spaces where people can connect with each other and physically experience new technologies.

Banks will need to seek ‘deep integration’ of banking applications with 3rd party applications

Studio 1 and Studio 2, for example, are places for showcasing innovative new technologies to KBC staff and customers. Pascal: “The focus here is on technologies with future applications.  For example, we’ll showcase biometric technology and explore how this could transform authentication in banking applications. We have even played with the Oculus Rift, which may seem pretty far removed from a banking operation. Nevertheless, we discovered potential applications in health and safety prevention, for example in training people how to use firefighting equipment.”

The Gallery is an experience centre where staff and visitors can engage with technology and solutions that the bank already offers today. This is important because as Freddy and Pascal learned, many staff had never used the bank’s latest mobile applications, quite simply because they do not have a smartphone or tablet.  The Fountain is a common workplace where employees who are bitten by the innovation bug can come together and experiment in new projects.

Pascal and Freddy also organise a range of activities that bring people together and expose them to new ideas. For example, they organise a regular ‘innovation café’ where people from different departments talk about innovation topics, dream up new ideas and explore ways of implementing such ideas.  They also organise three innovation exhibitions per year where both external companies and internal teams can showcase their ideas and innovations. It is an opportunity for staff to take a break from their day-to-day tasks and connect with new ideas and people. BT is usually present too, via inspirational talks (BT’s futurist Nicola Millard gave a talk at a recent edition) and technology demos. Pascal: “BT recently demonstrated an interesting personalised video technology. One of our managers spotted this and came up with an application that we would never have been able to come up with.”

Innovation is everybody’s job

While facilitation is important to engage people in the innovation process, ultimately innovation needs ‘doing’ too. One such initiative at KBC, called ‘inside-outside’, encourages internal people such as IT experts, to work with the bank’s commercial people in serving customers directly.

As a company we need to start thinking more like start-ups.

Freddy: “An increasing number of customers are approaching us with complex technology-related projects. They’ll use terms such as Big Data and IoT, but our business credit people just don’t have the expertise to evaluate those requests properly. That shouldn’t be reason to reject those proposals.  That’s why our commercial people are now bringing our IT people along to take a thorough look at such projects. And our role is to be connector in this, connecting insight with outside. We’re unique in this in the banking sector.”

Also in the ‘doing innovation’ bucket falls KBC Start-IT accelerator, an initiative that supports several young start-ups, both financially but also with the bank’s resources and talent. While this programme falls outside Freddy’s and Pascal’s remit, they are making grateful use of it. For example, the accelerator’s start-ups can showcase their technology at the innovation exhibitions and they are often seen inside the building taking part in initiatives or experimenting with the bank’s technology. “As a company we need to start thinking more like start-ups.”

All of Surf Studio’s initiatives are designed to engage a broad cross section of the bank’s people in the digital transformation process, by exposing them to a range of new ideas and technologies, and by stimulating new connections across organisational borders – both internal and external borders. This is also illustrated in the way that KBC is working with BT; it is a relationship that extends beyond the traditional customer-supplier relationship. For KBC, BT is not only a network provider but also offers inspiration and practical support in managing the digital transformation process.

Banks will need to be far more proactive in how they approach the market.

Autonomous services and the 3rd channel: a look at the future of banking

Freddy Van Bogget – Innovation Manager KBC – on LinkedIn
Freddy Van Bogget – Innovation Manager KBC
on LinkedIn

While Freddy and Pascal place a lot of emphasis on the “organic” and facilitative aspects of the company’s innovation strategy, they have also articulated a number of objectives that are based on a compelling vision of the future of banking.

Pascal explains: “At Surf Studio we want to focus on two key trends that in our opinion will define the future of banking: autonomous behaviour and the 3rd channel.”

With the concept of ‘autonomous behaviour’, Pascal and Freddy refer to a company’s ability to respond to consumer needs both instantly and in a highly personalised manner.

In the spirit of Amazon’s ‘one-click-buy’ feature, more and more services are available instantly, anywhere and anytime. As a result, people’s expectations are changing. Freddy: “They won’t tolerate a service where you have to go to a physical branch to sign a bunch of papers.” Banking services need to become ‘autonomous’ in the sense that these will take account of a consumer’s context and instantly and automatically tailor itself to that context.  That requires a more integrated and intelligent approach to service delivery. Freddy explains: “I recently booked a trip to America and I had to talk to about 20 different people to handle flights, hotels, insurance and a visa.  Imagine how wonderful it would be if I had an intelligent agent that handled everything instantly, so that I could only focus on the actual travelling. That’s what we need to achieve in banking too, but that will require a lot of R&D and development of smart algorithms.”

The ‘3rd channel’ refers to a growing trend that many services are not only sold by a company’s own brick and click channels, but also via 3rd party applications.

“In a Smart City concept the relationship that banks have with their customers will change dramatically. Banks will need to be far more proactive in how they approach the market. In particular, they will need to seek ‘deep integration’ of banking applications with 3rd party applications.  For example, most real estate sites already let banks do some basic promotion on their site. You can do a quick calculation of your mortgage payments based on the asking price of the property, but with deep integration you would be able to ask for a mortgage and get immediate approval, all from within the real estate application.

Parallels in the digital roadmap

Also in the above areas there are strong parallels with BT’s strategy.  As Peter explains: “At BT we also are striving for increased simplicity and immediacy in our service provision. In networking, for example, we talk about Zero Touch Provisioning. But also in a strategic sense I think our Cloud of Clouds offering illustrates the same principles. Our goal here is to provide secure connectivity, not only to our own cloud services, but to any cloud services the customer wants, whether delivered from their own datacentres or from third party public cloud providers such as Amazon and Microsoft. Essentially we are all moving in similar directions.”

Connect with us in our BT Let’s Talk LinkedIn Group to join the debate on the future of banking and innovation.