Westpac and CBA: Leading Innovation in Retail Banking

by | May 11, 2015

The past few years have seen both Westpac and CBA focus heavily on innovation in Retail Banking. And it's not easy for large, regulated corporates, dealing in your money and mine, to adopt innovation as a mantra. Like it or not, innovation involves failure, and for banks like CBA and Westpac, failure is not a word they want to use all that often!

However, Design Thinking and The Lean Startup methodologies change all that. Innovation now starts with the customer, not the product, failure is acceptable, as long as it is early enough in the cycle. Building products and testing them before general release now becomes the norm - and some will not make it to production, But thats OK. That's what this is all about.

Very interesting article around this in the CMO magazine, just released. Westpac, according to CMO, is operating three different models for driving new thinking into what will soon be a 200-year-old organisation.

The first of these is Westpac Reinventure, launched in March 2014 and is a $50 million fund for investing in local startups, including peer-to-peer lending service, SocietyOne.

In June last year, Westpac launched its second innovation initiative, dubbed The Garage, for the rapid development of new ideas. This was followed in September by an additional dedicated space called The Hive, which is designed for hosting innovation activities such as short-term projects and hackathons. According to Director of the Garage, Phil Gray, each of these initiatives grew from (then) financial services head and now CEO, Brian Hartzer who comments that the bank needed to look and act more like a startup to face the challenges of market disruption.

The Commonwealth Bank has also opened an innovation lab, which has been running for six months. Its Head of Innovation, Tiziana Bianco, says the Lab is part of a strategy to ensure the bank fosters sustainable innovation by allowing staff to get involved on projects.

“We don’t believe innovation is a department,” Bianco says. “We believe from the top down that it’s everyone’s responsibility and everyone’s role.”

The Lab is divided up into four areas for idea creation, user experience testing and problem-solving with clients. Cross-functional teams are drawn from across the bank, along with external subject matter experts from industry and academia, and the startup community.

“We have CIOs and CMOs coming in from our clients and working with counterparts within our organisation to really deepen the relationship,” Bianco says. “It’s about deep-diving into any problems they have within their organisation or their industry. Or it can simply be a discovery day, where the two organisation work together to co-design.”

Having the external viewpoint is particularly important to CBA, says Bianco.

“We understand that ideas are not always going to come from within,” she says. “The closer we can be to our clients, our business partners, our startup community and our staff, the more we are going to reap the benefits of those ideas and ensure we stay relevant.”

Bianco says the cross-functional structure of the Lab reflects the tearing down of functional silos within the bank itself.

“Technology, product and marketing really need to work closely together to make sure we understand what customers want, how to speak to customers, how to create for customers, and then how to operationalise those particular solutions for customers,” Bianco says. “We very much understand that each of disciplines when working together can bring more value to the customer.”

While the fit-out of the Lab took only six weeks, the planning stage took six months, as the bank strived to ensure it had the model right. To date, more than 12,000 people have come through, including many from outside of the bank.

“It has superseded some of our expectations in terms of the volume of work and the collaboration hat has come through,” Bianco says. “We are at 90 per cent utilisation, which is fantastic. Originally we thought it was going to be a slower ramp up.”

Increasingly, the facility is being used for processes which were not originally envisioned, including a recent request-for-proposal session with six suppliers, she says.

“It was quicker and we received better ideas than we would have if we had sent it to them individually, and everyone was really transparent,” Bianco says. “So while there were competitors in the room, they worked closely together to understand what they can do collectively, as opposed to what they can do individually as their own company".

“Over three days, we ran a hothouse and they came up with a prototype at the end of it.”

The user testing facility of the Lab has also been employed by the marketing team to test campaigns on a sample audience.

“If we are putting a Facebook ad together, we can test that internally or even test that with select customers before we even put that out to see what the response would be,” Bianco says.

Using this variety of lean and experimental methods CBA and Westpac have become leaders in innovation in retail banking, proving that large corporates can cultivate a culture of innovation in their organisations.

Jeffrey Tobias

About Jeffrey Tobias

Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well-known startups.

View All Posts

Managing Director, The Strategy Group

Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well known startups. Jeffrey’s corporate background includes leading global innovation strategy at Cisco, working with large corporates such as Adobe, Westpac, Telstra, Woolworths, and Perpetual.

Need help to get your business to the next level?

More related articles on innovation

Share This