• Innovation

When Open Innovation comes to banking

To keep up with the accelerating pace of progress in technology, and sometimes in regulations, businesses need to innovate faster and more frequently. The best way to keep from falling behind: Open Innovation. It aims to harness innovative ideas wherever they originate by pooling skills, expertise and ideas. And the trend has now conquered every business sector. Some banks, like BNP Paribas, have made Open Innovation a way of life!

Rethinking innovation

Open Innovation is a concept first used in 2003 by Henry Chesbrough, a professor at the University of California, Berkeley, to describe a process in which companies turn to outside sources to fuel innovation

  1. From other companies, startups, experts or university research centers, through partnerships and collaborations
  2. From all employees (innovation comes from “outside” the company’s R&D center, which previously centralized all innovation procedures), mobilized within a collective dynamic through idea boxes, internal innovation competitions, etc. 

Open Innovation is reciprocal: for companies, it’s also a way to promote its own ideas or patents by offering them to other industrial companies. That means this method of innovation involves sharing and cooperation between companies. And it’s also a way to keep up with the frantic pace of innovation and the overlapping of technologies: nowadays, no single R&D team can innovate “on its own.” 

An impact in every business sector

This approach originated in the IT world, where collaborative practices are the norm. But it later expanded across the entire high-tech sector, industry (especially automobiles), energy, health and pharmaceuticals. It is also encouraged by public systems, like competitive clusters, which promote collaboration between public research and industry, or financial incentives (France’s Research Tax Credit, which provides benefits to companies that outsource a portion of R&D, as well as grants awarded for hiring doctoral researchers through research programs with public labs, etc.). 

Public services have even hopped on the Open Innovation train, including the SNCF, RATP and La Poste. As have banks, in order to support their “digital transition.” 

In fact, “traditional” banks must adapt rapidly to changes in the market, driven simultaneously by “pure players,” new technologies, new regulatory constraints and evolving consumer expectations. 

In short, new security rules, the democratization of the Internet, the expansion of mobile, the arrival of connected objects and Big Data and the increasing speed of exchange have all forced banks to innovate.

Open Innovation is an integral part of the corporate culture at BNP Paribas: more than an idea, it’s a state of mind.

Open Innovation: a “state of mind” 

According to a study by Efma-Infosys Finacle, conducted among 140 retail banks in more than 70 countries, 84% of banks have increased their innovation budgets, while 69% believe that startups could help them develop new services. And for 40% of banks, the solution involves collaborating with Fintechs. Of course, not all banks capitalize on this collaboration. Only 20% of banks have teamed up with an incubator or accelerator. 

For some banks today, Open Innovation and its reciprocal advantages—banks benefit from the expertise of startups, while startups receive financial or logistics support to complete their projects—is fully integrated into the innovation procedure. That is the case at BNP Paribas, which carries out several different initiatives, notably aiming to:

  1. Encourage Open Innovation by bringing together midcaps and startups on common projects, through its Innov&Connect program,
  2. Stimulate innovation in banking by organizing hackathons (unavailable link),  with winners receiving funding or partnership offers, 
  3. Aid Fintechs, via a dedicated accelerator, created with L’Atelier BNP Paribas, whose Open Innovation Lab launched a unique program enabling collaboration between startups and the bank’s business entities,
  4. Build ties with startups through an Innovation Hub dedicated to Fintechs.

Don’t forget the partnerships built with incubators (such as the “Camping-NUMA”) or with schools (for example with Applied Research Chairs), or by organizing student competitions —all other ways to harness innovation outside the company. 

Open Innovation is an integral part of the corporate culture at BNP Paribas: more than an idea, it’s a state of mind.

Keep in touch and receive our newsletter!

Select your topics of interest and frequency of delivery.