Fintech innovation starts with experimentation. And, as fintech specialist Daniel Liebau says, that is precisely the weakness of traditional banks. “Embrace the experiment.”.

The banking system seemed clear and structured for a long time: as a company or consumer, you could turn to a bank for financial services such as payments, savings and loans. But as technology progressed, high-tech hubs like Silicon Valley started to understand that people don’t need a bank as such, but rather the services of that bank. They also realised that the combination of financial services and innovative technology could lead to an interesting revenue model, at the expense of the turnover of traditional banks.

From online payment and investment platforms to digital lenders and collection agencies, the number of fintech startups that connect directly with the customer has grown enormously since then. And now the banks themselves are developing initiatives to come up with innovative digital customer-centric services.

Eliminate risks

And that’s the point at which things often go wrong with traditional banks, observes Daniel Liebau, founder of fintech financier Lightbulb Capital and lecturer at Rotterdam School of Management, Erasmus University (RSM).

“A traditional bank has many different departments, and they all have one thing in common: without exception, they are working to reduce risks. There are dedicated compliance departments that monitor the other departments, and above them all is an external supervisor, who keeps an eye on things from the outside,” says Liebau.

Conservative culture

This rigid governance structure is at odds with the desire to innovate, Liebau observes. “Innovation is about creating new value, experimenting, trying new things. This whole attitude is diametrically opposed to what banks usually do, which is to eliminate risk as much as possible. The culture of banks is conservative to the core; they are mainly focused on preventing things from going wrong as much as possible.”

It’s this conservative culture that stands in the way of innovation, Liebau explains. “You can imagine innovation in fintech as a pyramid. At the top are cutting-edge technologies such as blockchain, artificial intelligence and data science. Banks are jumping on top of this, in the hope of quickly developing tangible, commercially interesting innovations. But they soon find that it is difficult to develop new applications out of the blue.”

Innovation methods

After that, they seek the solution in innovation methods such as agile and design thinking, Liebau continues. “In this way they hope they will be able to transform the technology into concrete applications and a usable revenue model. These are basically excellent methods; organizations often do succeed in using them to accelerate innovation.”

But still, combining technology and innovation methods in this way rarely leads to tangible innovation, Liebau observes. “That’s because organisations forget to invest in the third, underlying layer of the pyramid: innovation culture. For innovation to succeed, the right mindset is essential. You have to be convinced that the things you start will have a good outcome; not assume that everything is dangerous, as is now the case with banks.”

Small-scale experiments

Liebau realises that this is a tall order for the average, established, conservative bank. “It’s recognized that roughly 90 per cent of the experiments are doomed to fail. But it’s all about the 10 per cent that do succeed.”

The lecturer calls on organisations, especially banks, to embrace the experiment as much as possible. “If you set up ten experiments in five years, it will take a long time for one to succeed. But in the meantime, the outside world is constantly changing, so you don’t have that kind of time at all. It’s better to opt for many smaller-scale experiments each year; that will give you a better chance of encountering something valuable.”




Innovation is about creating new value, experimenting, trying new things. This whole attitude is diametrically opposed to what banks usually do, which is to eliminate risk as much as possible.

Daniel Liebau

Growth mindset

So how do you promote an innovation culture in your organisation? According to Liebau, what’s important is a growth mindset, in which employees like to take on challenges and are open to learning, feedback and criticism. “So exactly the opposite of the current culture of many banks, in which people tend to recline comfortably.”

The right leadership is an important component in this, Liebau says. “Innovation starts with leaders who can start a movement; with people who have ideas, and who discuss them with others and in that way create excitement. Mind you, that does not necessarily have to be the CEO. Inspirational leaders can appear at all levels of the organisation.”

An exemplary role

An inspiring leader must also dare to be tenacious, Liebau continues. “The enthusiasm about fintech can fade quickly if it takes a long time before you see the first successes. That’s exactly when leaders must dare to persevere and enter into dialogue with their people. The leader fulfills an important exemplary role; their enthusiasm and tenacity must flow down in the organisation.”

Budget cycle

In addition to inspiring leaders who have the right mindset, appropriate systems and processes are another important factor, according to Liebau. ”Take the annual budget cycle. In many banks, money can only be made available for experiments once a year, which makes it very difficult to be agile and respond quickly to technological developments. By opting for shorter investment cycles, you can respond much faster to what is happening around you.”

Physical environment

Finally, Liebau says, you should also pay attention to the environment. “I’m first of all talking about the physical environment. If everyone’s sitting in their own cubicle, it doesn’t exactly invite collaboration and experimentation.” But it’s the mental environment that is especially important, Liebau once again emphasizes. “If an organisation has a culture of zero tolerance for errors, then there is no incentive for experimentation. If you know how to successfully transform that culture and you dare to experiment, in the end you will spontaneously achieve a fruitful result.”


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