Do labs hold the key to successfully promoting a culture of new ideas and innovation in FinTech?

Necessity may be the mother of invention, but these days it’s more like the mother of innovation. In our digital world new ideas, devices, and methods hit the market every day—and it’s getting harder and harder for many businesses to keep up. Across industries, companies are actively seeking the next big idea or new technology— and FinTech is no exception.

The good news is that most savvy business executives know how necessary it is to stay on the cutting edge of technology. According to Forrester, the use and experimentation of innovative technologies is the single most important technology priority in 2015 for 61% of technology leaders and 56% of business leaders.

So, while we know new ideas and technology are necessary in order to be competitive—especially in FinTech—the real question is: where is all this innovation born?

In the pursuit of creativity and progress, multiple FinTech labs have sprung up as either external or internal incubators. These labs may hold the key to future progress.

Keeping innovation in-house

Several large financial institutions have set up internal incubators to experiment with everything from data analytics products to new devices that can transform the most basic of human behaviors (like purchasing).

Capital One has three internal innovation labs all along the east coast. These labs are used to test new concepts and ideas so they don’t waste time or money letting them sink or swim out in the marketplace.

Everything in the Capital One innovation labs, from the type of employees to the décor of the environment, reflects their goals of pushing digital initiatives forward and seeding new ideas into the organization. There is a huge focus on the customer experience and a design-centered thinking in their strategy that roots all activities to one common strategic pillar.

External innovation solutions

Some companies may not have the bandwidth to start internal labs dedicated to innovation and creativity. There is, however, a third-party alternative for these companies to consider.

FinTech Innovation Lab is a 12-week mentorship program that brings startups in contact with large financial institutions in New York, London, and Hong Kong. The lab is in its sixth year of operation and is intended to drive high-tech jobs in the cities that it operates in. During the program, partner companies are able to work with startups to help them further develop their ideas and hone their technology or strategy.

Building a successful lab in any environment

Whether it’s internal or external, a few things should be considered in order to create a successful FinTech innovation lab:

  • The mission for the lab should be clearly articulated. Innovation should be targeted to specific processes or experiences. Although it may seem like a contradiction, giving guidelines to creativity allows for freer and more efficient exploration of ideas.
  • Ensure there is strong leadership in place. Ideas need to be nurtured and teams should feel motivated to continue working on them. Having an inspirational leader motivate the teams can help breathe new life into any project.
  • Produce out of the box ideas—with one exception. While there are no bad ideas, it’s important to make sure testing is rigorous and representative of live conditions. The key to incubators is they are place for new ideas to flourish, but when it comes to validating whether or not those ideas work for the marketplace, testing is vital.

We’re only seeing the tip of the iceberg when it comes to FinTech and innovation. With the promotion of new ideas and lab settings where creativity is encouraged, the next few years hold a lot of promise in terms of new digital devices, services, and products. It’ll only be a matter of time before the next wave of innovation is upon us.