A growing number of financial companies are trying to foster creativity with in-house innovation labs.
Some banks have facilities where employees can dream up, plan, execute and get feedback on new products and processes; some even field-test the concepts at branches to see how customers react.
For other companies, the "innovation lab" is a Web site where new or soon-to-be-released products and services are presented and feedback is elicited.
Bank of America Corp. has gotten plenty of attention for its innovations, including its work in the Center for Future Banking that it started last March in partnership with the Massachusetts Institute of Technology's Media Lab.
Though that is a big-picture, futuristic enterprise, the company also has a Gateway Innovation Lab staffed by seven employees.
Matt Calman, a B of A senior vice president and the research and development executive who runs the lab, said it works with all of the company's business lines to explore concepts. It builds simulations and prototypes and evaluates how new technology can be applied to specific business problems.
Last year the Gateway lab built more than 40 prototypes, worked on nine patents and supported five market trials of new capabilities. Calman said his team's work can be customer-facing, though most of it is for internal use, and can range from "outfitting an ATM with a new piece of technology to [creating] a whole new sales play."
The lab also oversees field tests in the bank's Charlotte retail lab (more of a "showcase" than a branch, he said) and in its two "customer-driven banking center stores" in New York, where it uses services not yet widely available in other branches, including videoconferencing, surface computing and safety deposit box technology.
Umpqua Bank Holdings Inc. experiments with a wide range of technology and design concepts in its Portland, Ore., innovation lab, which the Roseburg, Ore., banking company started at the end of 2007. This lab features a 25-foot interactive touch screen wall and videoconferencing kiosks, and it functions as a fully operational branch. Lani Hayward, Umpqua's executive vice president for creative strategies, said the lab tries out technology and concepts "that are both edgy and ready for prime time."
Banks do not always need a physical site for testing how their ideas might fly with customers. Wells Fargo & Co. opened its online lab in January 2007 "to expand the dialogue with customers by gathering actionable feedback on things the bank just released or was about to release," according to Derick McGee, the manager for strategic capabilities in the San Francisco banking company's Internet services group.
Among other services, the company is currently soliciting reaction to its vSafe document storage service, which is already available to customers, and to SettleUp, a pilot offering that lets customers track shared expenses online and send friends IOUs. McGee estimated that about 15% of the people visiting the Wells site offer useful feedback, both positive and negative.
U.S. Bancorp does not have a "branch of the future," according to Dominic Venturo, the chief innovation officer for its retail payments solutions division, but his group frequently tests early-stage payments technology with employees and customers. "Not everything we pilot is ready to go commercially," he said.
One benefit of the innovation lab setting is that it provides an environment in which employees can create, develop and make improvements based on feedback without the "fear of failure" that a traditional bank product development team would face, Calman said.
Banks say the facilities give them the opportunity to understand not only what is possible but also what is practical for and desired by consumers. They also give consumers a way to feel their opinions are heard and appreciated.
"This is giving us new insights to create value for customers relevant to where they're going," Calman said. "The bottom line is that … we want to make breakthrough improvements here."
