Stuart Jones, Jr.
We talk a lot about innovation and data science at Sigma. An early engineer at the company (frequently) wore a t-shirt that read: “Friends don’t let friends make decisions without data.” Given our mission to build a more transparent world driven with data and technology, this moniker is incredibly salient.
So what does the data say about innovating during a crisis?
Recent research from McKinsey & Co. makes clear that firms who innovate during a crisis outperform those who do not over the next five to six years. In fact, firms who innovate in times of crisis outperform those who don’t by a whopping 30%! In other words, innovating today is critical to future growth. Now you have the data my friend.
Yet, knowing you should innovate and actually doing it are different things (See: A helpful list of those that didn’t move fast enough).
Innovation depends to some extent on your perspective. In a post-COVID world, it could mean that your organization has discovered - finally - that it will not collapse during remote work. One global bank executive recently told me that the COVID crisis has effectively “proven out” a hunch that the institution’s compliance team is more productive in work-from-home-mode (e.g., no commute, less distractions, etc.).
But is it sustainable? And is using Zoom really the innovation that will drive 30% advantages over your competition? (Hint: Probably not)
In financial services, risk and compliance is one of the areas where innovation would arguably be most valuable. These teams continue to be overburdened by manual processes and antiquated systems. The smart institutions will drive and shape the change and use this crisis as a unique opportunity to re-set, re-price and re-think systems and controls that often pre-date the Internet. Furthermore, it’s important to note that, according to Finextra, “the power of RegTech goes beyond just simplifying compliance and cutting costs. It secures competitive advantage.” At Sigma, we enable our clients to not only drive efficiencies and stave off the coming cost cutting, but to pursue new opportunities confidently and compliantly.
In sum, regulators recently signaled a willingness to enable pilots and progress around new, innovative approaches per recent guidance. Sigma also directly heard this message as a part of this year's New York Fintech Innovation Lab, where we worked with many of the world’s leading financial institutions and met with a host of state and federal regulators.
According to the data, now is the time to innovate. So, what are you waiting for?