RDS SPECIAL: Capital One's Lynn Pike Outlines the Three Elements to Successful Innovation In Banking

After an unsuccessful attempt to find a sandwich at lunch on Wednesday (Note to BAI: Next year, order more sandwiches), I wandered over to the large ballroom to hear Lynn Pike, president of Capital One, give a talk on innovation. Fine, a positive message like that could help take my mind off my hunger! And seeing the clips of the firm's well-known Visigoth TV ad campaign was good for a few laughs.But it was actually interesting to hear the banking veteran's take on what makes an innovative company. She was able to boil it down to three dimensions. It might sound too simple, but Pike seemed to tie them together nicely so that it actually did make sense. The trio of elements for innovation according to her were business leadership-understanding what's going on around you; technology leadership-enabling your team to take care of customers and do things more efficiently and effectively; and cultural leadership-the essence of what drives everything at the bank.

Pike gave more specific examples of how each element played in her career at various financial institutions. Not only did each dimension tie into each other, but technology played a key role even in the business leadership and cultural leadership areas. "Customers make us invest in technology," Pike said. "They want choices. So technology is a big driver in all the decisions we make."

While at Wells Fargo, for instance, Pike says the bank looked for a way to put more control into the hands of its frontline people since they are the ones directly interacting with the customers. So they made some heavy technology investments that allowed Wells Fargo to push real-time information to the frontline to enable these team members to make the decisions they need to help customers better and to help them lead in their local market. It was this decentralization that lead to success for Wells Fargo at that time, she said. "Always question the status quo, even if you're doing well," advised Pike.

Specifically speaking of technology leadership in innovation, Pike looked back to her days at Fleet when it was acquired by Bank of America. The decision was made not to convert Fleet to BofA's platform but to put Fleet on a completely new platform that would then become the architecture for the entire Bank of America company. "The team focused on top line growth and bottom line impact to deliver a platform to keep its associates and customers engaged," she explained. "When you put two companies together you have to pay attention to all the constituents and take advantage of the all the knowledge that exists in the companies."

Finally, Pike examined the cultural aspect. For example, she joined Fleet at a time of grate change-branches were being closed, people were leaving, customers we fleeing. "All the metrics were going in the wrong direction. So what did we do to chance this dynamic? We decided to spend more money!" The reason, she said, was because the frontline people where the ones directly experiencing the pain points as they interacted with customers. They wanted to be able to deliver for customers. Therefore, the bank invested in technology to allow them to handle problems as they cropped up. "Revenue returned, growth returned, attrition was way down and customer satisfaction was up," she commented. "Periods of change create uncertainty, so it's important that the team has a compass so they know what matters to the bank. You want to arm your team to take care of your customers. Culture is the single biggest driver of change and innovation at the organization."

Pike has taken these lessons and applied them to her work at Capital One, which has a unique operating model in the industry. Some of the same challenges Pike experienced in the past lay ahead of her as Capital One takes Hibernia and North Fork and create Capital One Bank--three different companies with three different cultures, technology platforms and market focuses.

In the end, to succeed and innovate, Pike said a clear strategy is vital. "You have to have clarity of your strategy, clarity of what the company wants to be in the long-term so that the journey makes sense and ensure that your team is connected to it. You have to know how to move from idea to execution."