The vast majority of US and UK banking and capital markets firms have continued or increased funding of large innovation initiatives through the financial crisis yet most do not see innovation as a way to rebuild their businesses over the coming years, according to a survey from Accenture.
The technology consultancy surveyed 639 middle managers at large US and UK firms in eight industries on their firms' attitudes to innovation in products, operations and technology.
Around a quarter of respondents were from banking and capital markets and they were more likely than those in any other industry to claim their firm is more innovative than the competition (70%) and has a well-defined strategy for innovation (51%).
Less than a fifth of banking and capital markets executives say funding has been cut for large product, operations and technology innovation projects in the last six months, compared to 30% who have seen an increase of money and half who have not experienced any change.
Despite this, just five per cent of respondents from the industry see innovation playing an important role in their company's efforts to increase operational efficiencies and reduce costs.
Accenture says this is "alarming", particularly in relation to retail banks which "have an absolute imperative to reduce their cost-to-income ratios so they can rebuild profits and reserves".
The vendor argues that "operational innovation - from modernising core banking systems to capturing deposits online - will determine the fate of many banks".
In addition, banking and capital markets executives are the least inclined (18%) of all industry executives to believe innovation will be what rebuilds their businesses over the next three-to-five years.
Instead, most (63%) liken their organisation's innovation strategies to a search for the next "silver bullet" rather than a diverse pursuit of new opportunities. More than two-thirds say their organisation prioritises short-term financial results over investing for the long-term.
Accenture says the industry needs to take a longer-term and more holistic view on product innovation. Capital markets firms should "take a page from the handbooks of leading manufacturers and industrialise their processes for product development to do a better job managing the real risks and costs of the products they produce".
Asked about challenges to innovation, banking and capital markets respondents cite predicting future trends, identifying changes in customer behaviours and needs, and tapping new technologies.
Accenture claims the "winners" will be defined by mastery of predictive technology and data analytics that improves decision-making and helps financial firms increase market share and manage risks.