Earlier this month Schwab announced the creation of its new Digital Accelerator Hubs. These Silicon Valley Startup like organizations combine cross-functional talent from different disciplines to employ an Agile approach to “rapidly ideate, iterate and test new ideas related to specific user journeys or business opportunities.” The new units will explore creative solutions across Schwab’s businesses including both individual investors and advisors.
The move by Schwab is just the latest example of how much financial businesses are retooling as fintech companies. Fidelity was one of the early adopters of the innovation incubator when it created Fidelity Labs back in 1998. It wasn’t until 2014, however, that the movement began to really pick up steam. In that year, online broker, TD Ameritrade first introduced its incubator as did Credit Suisse on the banking side. In the years to follow, most leading financial institutions have created some form of innovation sandbox to keep their businesses on the digital cutting edge, from Citi Fintech to Open Innovation at Barclays Bank to Deutsche Bank’s New York Innovation Lab.
Building an infrastructure supporting innovation will no doubt accelerate the pace of change in financial service production and distribution. But it also may impact the culture and business practices of firms who come to recognize that their business is as much technical as it is financial.