How a Big Bank is Fighting Disruption – Rabobank
Rabobank saw that 23% of their existing revenue was under threat from startups. In other words – disruptive technologies. So they decided to do something about it.
Maarten Korz an Innovation Manager within IT with a team of 7, and I discuss how Rabobank is adapting to changing market conditions and leveraging corporate entrepreneurship. The banking crisis of 2008 was a wake up call for the bank to consider how disruption can affect not only their business, but all industries. Last year they commissioned a report by Accenture to find which of their revenue streams were coming under threat from startups jumping on to new technology trends such as mobile banking, money transfer, crypto currencies like Bitcoin and new payment protocol’s like Ripple. 23% is a sobering figure for a quick first look at disruption.
23% of our revenues are under threat by startups – and those are just the ones we know about.
Rabobank are now very much plugged in to their local startup ecosystems supporting various accelerator programs such as Startup bootcamp, Startup Weekend and now they even cofounded a startup incubator called UtrechtInc. They then decided to explore how to adapt the startup mentality from the ecosystem into their own organisation – namely by setting up innovation courses and “hackathons” for employees from which managers have been very surprised that so much could be achieved in a short amount of time.
Maarten mentions how acquiring a startup may not be the best strategy, opting for collaboration instead which required being a part of the startup community. We also explore the potential of entrepreneurial employees within the existing organisation which Maarten predicts is 10-20% and how their entrepreneurial traits can be unleashed to drive innovation. Rabobank are now in the stage of exploring how to fund internal startups.
It helps to have an innovative thinking CIO says Maarten (which Rabobank does) but Innovation efforts must be well balanced so as not to upset the mentality of avoiding risk. 2 key structures have been implemented to help balance innovation efforts:
Two-Thirds of all experiments must become applicable to new Rabobank products and services within 2-3 years
Time and Innovation Budgets are divided up into 3 categories:
First – 70% for Incremental innovation
Second – 20% for Business Model and Radical innovation
Third – 10% for Blue Sky and What If innovation
The end of the interview was very interesting when we were exploring that employees are generically treated as “job descriptions”. Everyone wants to be a “manager” and receive the perks and go on “management trainings”, but to spur innovation, the role of the manager is really to “facilitate” the professionals and entrepreneurs in developing ideas. They for one, are starting more professional trainings and allowing people to use their passion and expertise.
Most barriers are just internal barriers so you can go around them and try it, Maarten says. He notes it’s better to try and then ask for forgiveness later if it turns out to be a mistake, which most of the time it is not. If you get fired – well, then you need to really ask yourself if that organisation is the best place for you to be applying your skills.