Most executives in the financial-services industry see innovation as very important to the ability of their company to meet short- and long-term performance targets, according to the latest McKinsey Quarterly survey of global executives.¹ Overall, the survey findings suggest that innovation will be a major competitive battleground in the financial-services industry. Respondents, who represent public and private firms in retail banking, asset management, investment banking, insurance, and other financial services, consider product innovation to be very important and view business model innovation as growing in importance.

However, a majority of the executives we surveyed view innovation as more challenging for financial-services institutions than for companies in other sectors. What’s more, many survey respondents say that their company has significant room to improve performance on a number of common best practices for fostering innovation, such as using consumer insights to drive new ideas and dedicating organizational structures and funds to innovation. More than half of the respondents report that their company has pockets of successful innovation, but the efforts are not developed and sustained throughout the company.