Driving Sustainable Innovation – Mo Khalil, CBA
General Manager of Digital Banking (Chief Innovation Officer) for the Commonwealth Bank of Australia, Mo Khalil shared some of the bank’s innovation strategy with the 2016 Leading the Product audience, giving insights into how the bank stays competitive in a highly innovative and fast-moving space.
Getting to know startups
Mo began his career in bank strategy, building his understanding of how banks work and operate as well as the challenges they face. This was semi-digital, but pre iPhone era.
“There were challenges back then to driving innovation”, says Mo, “It was hard to drive new product experiences.” With the launch of the iPhone and apps, Mo saw an opportunity to do things differently. He decided to leave big banking and move into the startup world. Firstly he worked for a well funded company called Bundle. Thanks to a partnership with Citibank, Mo and his colleagues had access to the anonymous data of 20 million credit card customers in order to make product decisions in their space.
Mo’s next startup role required building funding and starting with the customer problem. Moven started from three people and grew to 40. It recently deployed with Westpac and TD Bank in Canada, becoming the number one app downloaded in that country for a few months before settling into a top five position.
Mo enjoyed the allure of startups – a romantic ideal of being a pioneer and doing wonderful things and he still recommends this environment. “There’s also the hipster, hacker, hustler culture that brings together the ideas people, the tech types and the person who can garner market interest. People with the right skills can do amazing things.” he says.
After spending seven years in the startup environment, the cost of doing a startup was declining. Companies could launch with just one million dollars in funding. This caused a huge explosion in the number of startups in the US and beyond.
Mo followed the ‘traditional’ startup path more than once, solving customer problems and achieving a lot in a fast-moving environment. He began to see the big banks as slow moving ships.
The startup experience, however, is a rollercoaster, a highs-and-lows ride through funding, hiring, reality checks, troughs of sorrow, problem-solving, finding product market fit and then finally progressing to scale.
“Only one in five startups succeed to some degree. Two thirds will drastically change their plans along the way. Repeating the experience doesn’t even mean you have a guaranteed win in this space. You need effort as well as fortunate events.” says Mo.
“As a startup CEO you sleep like a baby – you wake up every two hours and cry” jokes Mo. “There are moments where you are paddling just to survive.”
CBA’s innovation story
Nowadays, Mo is at the Commonwealth Bank. Why? Because large enterprises are finally beginning to become adaptable enough to participate at the level of startups.
There have been a lot of things that CBA has done right. For example, it has Australia’s leading banking app. The reason for this is there is an established Agile culture within the corporation. They operate with scrums, sprints and a rapid release cycle. They also have existing talent, many of whom have worked at startups and who bring many great ideas to the bank. The CBA also has access to the funding that many startups lack.
Most critically, the CBA has scale. This is what every startup craves, and it solves a lot of problems that startups come up against.
What problems are there to solve at CBA? How do they drive Lean startup capability? “We have a Digital Sustainable Innovation Model that incorporates bottom up initiatives. They have room to experiment”, explains Mo.
From the moment Mo showed up at CBA he met people who had great ideas and wanted to work it into the strategy. Lots of these ideas were worth exploring, so CBA created a tool called ‘Unleashing Innovation’ that invited ideas to overcome customer challenges.
This led to ‘Canapult’, a streamlined approach to training team members on the lean startup methodology. Anyone on the digital team can generate an idea, and they are then given gets four hours a week to explore their idea, with a small amount of funding and a lightweight innovation process. At the end, they can pitch for funding.
As well as sourcing ideas, the CBA gives people room to develop the idea, following it up with the ability to take it further.
“It’s simple – the team member starts with an idea card, then progresses that to a brief. They then have access to teams and experts as well as the support they need.” Once a prototype is ready, they can pitch to the digital team and their idea may be incorporated into a sprint, a new product or a new feature.
Case Study: 3D Touch Capability
Mo shares how a team member at CBA spent eight weeks looking into 3D touch and building a prototype using a modified lean canvas. After he pitched his findings, the feature went live within the CBA app within two weeks.
At CBA, two thirds of people have been allowed to develop their ideas and half have gone through to production. The overall success rate is 50% – people are seeing their ideas implemented at scale and being sent direct to customers. Those who fail at making it to market still get an idea of developing and pitching ideas. They’ve still been able to explore their concept and try to execute it.
As a result of this, the CBA app is establishing a gap between itself and the offerings of other apps. The team’s understanding of what works and what doesn’t is making a difference and is keeping their app ahead of the competition.
How to further accelerate : CBA X App
Today CBA is limited to the main Commbank app because it needs its customers to have the best experiences.
A new app, tentatively called CBAX, will allow customers to engage earlier and for teams to be able to throw out ideas to the customer, suggesting features and capabilities.
The belief is this will allow for multiple experiments that get customers excited about what’s coming.
Mo understands that challenges remain for innovation within the corporate sector in Australia. These have to do with continuing to win in a space with a disruption cycle driven by startups and a network effect driven by global giants. CBA and other banks are caught in the middle, facing the challenge of keeping up with innovation and the threat that global tech giants present to the market.
Mo is a Financial services innovation and digital product strategy expert with extensive experience at both large institutions and financial technology startups.
As General Manager of Digital Banking (Chief Innovation Officer) for the Commonwealth Bank of Australia, Mo’s focus in on building innovation capacity and leadership while delivering digital experiences, partnerships and capabilities that enhance and support the financial wellbeing of people, businesses and communities.