Overcoming the Barriers of Adopting Innovative Technologies
- There are roadblocks to innovation in the banking industry
- Negatives can be turned to positives
- One way to deploy new technologies is working with new vendors
Innovation in the banking sector faces persistent roadblocks that hinder transformation and progress, as explored by Paweł Stężycki in Netguru’s insightful article “Seven Barriers To Banking Innovation and How to Beat Them”. Stężycki notes that, as fintech startups disrupt the industry with agility and user-focused technology, traditional banks must address deep-rooted issues to remain competitive.
The first major obstacle is the inertia trap—a reluctance to move away from legacy business models, leaving decision-makers paralyzed even when simple technological improvements are available. Closely related is the hierarchical organizational structure that stifles creativity; in rigid systems, new ideas must pass through layers of approval, slowing innovation.
Another key barrier is the lack of an innovation culture. Banks often prefer long-term planning over iterative, experimental approaches. Without a willingness to “fail fast and often,” institutions miss out on valuable learning opportunities. Partnerships with external vendors, like Netguru’s collaboration with Solarisbank, are highlighted as ways to prototype and test ideas more rapidly.
Turning a Negative Into a Positive
Talent shortages exacerbated by outdated cultures also impede progress. Attracting skilled IT professionals is a challenge, and many banks rely heavily on outsourcing. Meanwhile, technology gaps persist; some banks rely on mainframes from the 1960s, making it difficult to deliver modern, user-centric digital experiences.
Regulatory pressures, another barrier, absorb resources and sometimes serve as an excuse for inaction. Yet, Stężycki suggests turning regulations into useful tools.
Instead of seeing regulations as obstacles, banks could see them as assets. After all, regulations are there to protect customers and get products to market safely.
Finally, a competitive, siloed mindset limits collaboration and knowledge-sharing between banks—even as BigTech firms move into financial services, raising the stakes.
Technology and Innovation
As avid blog readers can attest, OrboGraph supports embracing the latest technologies and innovations for the banking industry. In order for financial institutions to stay competitive, they must adopt technologies that can do everything -- from automating manual tasks and processes like check processing -- to increase customer satisfaction.
And, as noted by Stężycki, one way to deploy new technologies is to work with external vendors. OrboGraph, like many of these fintech vendors, specializes in certain processes and functions. By partnering with fintechs, financial institutions can tackle specific challenges to improve incrementally.
Additionally, if the financial institution does not possess the adequate internal resources to deploy directly, fintechs have already partnered with service bureaus and core providers, enabling banks to utilize their technologies through platforms that are already in use by the financial institutions.
It's clear that in the competitive landscape, financial institutions need to switch from "traditional" and adopt new innovations -- or be left behind.
