Citizens Challenge 2019: Driving Innovation In Banking
Hackathons can be an excellent way for financial services firms to round out their innovation portfolios. Innovation events like these can help address changing consumer needs and behaviors, as well as competitors’ responses to them. They can help ensure the firm’s survival by adding net-new value to consumers.
The Citizens Challenge, held by Citizens Bank on October 4–6, 2019, is a good example of a hackathon event meant to generate innovative solutions to pressing problems and to meet new digital talent. As designed, it uncovers incremental solutions to immediate customer needs.
The Citizens Challenge
Over the first weekend in October 2019, Citizens Bank held its second innovation challenge, which is its “platform for individual developers and startups to prepare and present innovative technology ideas in banking.” The event was held in Boston’s Seaport neighborhood at District Hall, a commercial innovation and collaboration space.
The event was facilitated by Citizens Bank technology leaders and managed by the Open Bank Project, a third-party innovation and ideation company that provides open APIs, apps, and a cloud-based sandbox for a variety of purposes, including hackathons such as this event.
Lamont Young, EVP and head of digital at Citizens Bank, outlined the motivation for the event: “Fintechs and other digital disruptors put the customer and the customer experience in the center of everything they do. We need that kick in the backside to get us going.”
Hackathon events like the Citizens Challenge have emerged as an opportunity to find innovative ways to solve customer problems while simultaneously identifying digital talent and marketing the company to the developer community. Frédéric Chanfrau, EVP and CIO of the commercial bank, summarized this by saying, “This event is partly a recruiting pitch. Citizens has a big agenda, and we need people with your skills.”
Citizens Bank is not unlike other regionals and even super-regional banks; a large percentage of its technical talent is effectively outsourced. That strategy was critical to launching capabilities quickly to stay abreast of banking sector competitors. But the world is shifting: Technology has become the critical core competency needed for long-term survival. Citizens, along with most financial services firms, recognizes the need to shift and bring more technology strategists, developers, and data scientists into the firm. “Chase is spending $10 to $11 billion per year on technology. Apple and Google are, too, as are the Chinese firms. We know we have to pivot and change to survive, and we’re doing that,” said CIO Michael Ruttledge.
Ruttledge outlined the five pillars guiding the bank’s technology team in support of Citizens’ digital transformation:
- Deliver faster.
- Construct and operate on an API platform architecture.
- Find and hire the best digital talent.
- Transform costs by leveraging things like cloud infrastructure and test-driven development.
- Protect the core, focusing on capabilities such as resiliency and availability.
The Citizens Challenge asked teams of fintechs and students (including non-student teams that were not from a formal company) to address one of three problems:
1. Consumer Challenge
Improve the speed and efficiency with which the bank serves its customers, such as streamlining loan approval and processing or complying with know your customer (KYC) regulatory requirements.
2. Commercial Challenge
Improve how the bank onboards new commercial customers and reduce friction, such as collecting and validating fewer documents about customers or enriching the customer profile with information from open data sources to avoid manual entry.
3. Shared Services Challenge
Use data to make mobile-first customers smarter about their spending and savings, such as using the power of social media to drive positive financial health behavior or using a customer’s transaction history to enable them to make and keep financial plans.
Prizes ranged from monetary awards of up to $10,000 for the winning fintech entries to technology prizes such as Oculus Rift headsets or drones for the winning “student” teams.
Solutions And Winners
Twelve teams presented their solutions in 3-minute bursts. They showed a combination of mockup screens and real functionality using the provided example data and APIs. A Shark Tank-like panel, including three Citizens senior executives, a VC partner, a fintech CEO, and the leader of an incubator, were on hand to hear the presentations, ask the teams questions, and ultimately decide on the winners.
The fintech i2Chain won the $10,000 grand prize with a solution for privacy and KYC compliance through which individuals and firms could securely share their information with the bank and the bank could subsequently securely share that information to ecosystem partners as needed to serve the customer.
The winning student team’s solution provided:
- A KYC approach using social media cues.
- Functionality to identify Millennials and the key messages that could motivate them to save.
- Document compliance methodology for adhering to lending covenants using modifiable rates as an inducement to compliance.
What It Means For You
Thanks to support from the Open Banking Project, this hackathon event was oriented toward the use of APIs, apps, and mock data to create open-banking-type solutions. This kind of partnership is critical to making hackathons successful, as teams need tools to help them solve the challenges posed. Unless the host firm’s technology team can build these capabilities, it’s best to partner. Other potential hackathon partners include TechGig, MachineHack, Kaggle, HackerEarth, and OpenML.
But open-banking-type solutions present only one class of business solutions. We believe that if you only host one of these events per year, a breadth of innovation types and business models should be investigated by the teams. Forrester has identified five types of tech-driven innovation, including:
- Incremental changes.
- Responses to digital disruption.
- New digital business value.
- Adjacent industry business opportunities.
- Moonshots that address future market needs, create net-new market value, and break through current market limitations.
Most hackathons are geared toward uncovering potential solutions to immediate problems or responding in a limited way to digital disruptors. From our experience, these kinds of events are less frequently geared to finding new business value or adjacent industry business opportunities. They are rarely, if ever, geared toward moonshots.
Overall, your innovation portfolio should include efforts that expand your market reach, address emerging needs, and involve at least one moonshot type of scenario. As you plan for your 2020 innovation activities, you should not only plan hackathons that address immediate business opportunities but also assess how your customers’ needs are evolving, which market and environmental changes require you to change the products/services you offer and the way you go to market, and how emerging technologies can help you create net-new customer value.
Read more in the Forrester report “Use Moonshot Innovations To Define Your Company’s Future,” May 7, 2019, by James Staten, et al.