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Risk Aversion: The Biggest Innovation Obstacle
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Jonathan_Camhi
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Jonathan_Camhi,
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11/30/2014 | 10:10:26 PM
Re: Risk and Size
I hear a lot from smaller banks about trying to differentiate themselves in online and moble banking. I think they're starting to realize that it isn't enough for them to just copy what other banks of different sizes are already doing. They need to do someting different, and are probably more willing to take risks to do that.
Becca L
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Becca L,
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11/29/2014 | 4:31:24 PM
Re: Risk and Size
Few industries are as risk adverse as banks! I am glad to learn you're noticing the smaller players taking some risk - I suppose their successes are valuable case studies for the bigger players, who can use them to slowly deploy tests in their regions.
KBurger
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KBurger,
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11/18/2014 | 10:33:11 AM
Re: Risk and Size
This is a great analysis, Rick. But don't you think a lot of the risk aversion related to innovation is also because in the past we have seen terrible consequences because of bad risks taken in the name of innovation? For example, Enron was touted as a true innovator in energy pricing/trading, but what they called innovation was basically greed, scam and inappropriate procedures. Similarly, a lot of the activity around subprime, CDOs, etc. that led to the financial crisis was touted as innovative ways to drive growth. I'm not saying that innovation is bad because it's risky, I'm saying that the conflation of innovation with risk is sometimes understandable & not so much because of company culture but because of an inevitable backlash to disastrous endeavors. So then the challenge becomes, not so much "change your culture" but rather, understand better what innovation is and is not?
MickSimonelli
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MickSimonelli,
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11/17/2014 | 7:31:25 PM
Re: Risk and Size
I think you're right that the banking industry in general is risk averse. But I do see some credit unions and smaller banks realizing their tenuous positions and being a little more willing to accept risks. Most have a loooong way to go though.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
11/17/2014 | 4:35:13 PM
Risk and Size
I think it's interesting that you find larger companies are usually more risk averse, Mick. I often find that in banking, the smaller institutions are very risk averse as well. And they have trouble with the resources and talent needed to create the kind of "protected environment" that you mention as a key for innovation to flourish. Do you find that smaller banks are more willing to try new things and think outside the box?


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