FIS has designated a permanent area in its San Francisco office to test and showcase mobile banking and payment apps, highlighting the pressure on traditional vendors to stay current on emerging technologies and recruit young tech talent.

Aside from financial staples like an ATM, this digital innovation lab — which FIS nicknamed "the garage" — features wearable devices, a high-definition display wall and playful decorations like a mock fuel pump. FIS will use the space to test ideas, demonstrate new technologies to bank clients and others, and — arguably most important — build innovation street cred in a city of software developers courted by high-profile brands.

"You have to act like your competition and provide an environment where twentysomethings with their pick of jobs want to go," said Daniel Van Dyke, a research specialist at Javelin Strategy & Research.

Big banks like Wells Fargo have built their own labs that flaunt technical creativity and incorporate design thinking, which mandates learning by doing and failing fast. But the vast majority of financial institutions, which depend on vendors like FIS (the world's largest such provider), often lack the dedicated resources to dream up and test ideas on the latest and greatest gadgets.

"Banks want to know if vendors are thinking of the future," said Stessa Cohen, a research director at Gartner. "You can't wait for banks to say 'this is what we want.' It's already a step too late."

So like the giant banks, some traditional vendors are changing the way they dream up and showcase R&D work. At NCR's Digital Insight, for example, a small, dedicated group helps clients experiment with technologies like biometrics.

FIS, which is looking to expand its team, says referrals are one of its top talent pipeline sources. So employees need to be kept happy by being able to work on edgy technologies that give them the pride of being first in market.

The vendor already had labs in New York, London and Bangkok. The San Francisco lab, announced Wednesday, is the company's only permanent space for testing and building mobile-specific banking and payment applications.

"It's very much a deliberate move by me and the team to unlock some creativity," said Doug Brown, senior vice president and general manager of mobile for FIS.

The new lab marks an upgrade to the past practice of "jerry-rigging conference rooms," said Brown. Now, FIS lets employees book the room to test ideas and pitch the company on proofs of concept.

"It's not just Legoland playtime," said Brown.

FIS recently announced Apple's Touch ID fingerprint-authentication technology will work with its mobile app, so people can authenticate ATM transactions with a thumbprint instead of inserting a card. The project was led by a development group based out of Marin County, but the team used the garage for prototypes and user experience testing.

The garage resides in offices FIS moved into in June — which signaled a shift from cubicle décor in its previous San Francisco digs two miles away. Needing more space, the vendor used the move as an opportunity to make design more than an afterthought and add amenities like a game room, bike storage, and a shower.

Javelin's Van Dyke, who visited the office months ago, said it has a trendy, industrial, unfinished look.

"It seemed like a place where twenty- and thirtysomethings would love to work," he said.

Nearly 100 people work in the office — and the majority of those employees are developers, engineers, architects and testers. The garage is an extension of a strategy designed to make the daily grind a source of creative inspiration for those coders.

The challenge with any innovation lab, however, is to produce results.

"You can't just put a lab out there and then you don't hear anything about it," said Gartner's Cohen. "It would be like having a Twitter account and never doing anything."

Brown said having staff working around the lab makes it more substantive. Later this year, FIS plans to use the space to host events like hackathons and meetups. And on an ongoing basis, the garage will be used to help bankers understand newer concepts — including FIS' cardless cash product. The technology, which ties the mobile app to the ATM, shaves more than 30 seconds off the transaction time.

Brown says cardless cash sounds kind of cool when he describes it to bankers. But when they see it in action, their reactions are more like: "Holy crap, that was fast."

"We are not all Steve Jobs," said Brown. "We have to experience more."