{"id":34181,"date":"2018-11-13T17:48:45","date_gmt":"2018-11-13T22:48:45","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/future-proofing-financial-services-barclays-accelerator-program-and-open-innovation\/"},"modified":"2018-11-13T17:49:01","modified_gmt":"2018-11-13T22:49:01","slug":"future-proofing-financial-services-barclays-accelerator-program-and-open-innovation","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/future-proofing-financial-services-barclays-accelerator-program-and-open-innovation\/","title":{"rendered":"Future-Proofing Financial Services: Barclays Accelerator Program and Open Innovation"},"content":{"rendered":"

The rise of financial-technology (Fintech) is a response to both rising consumer demands for convenience and value as well as the untapped opportunity of large unbanked and underbanked populations. Traditional firms have historically struggled as innovation requires ever-broadening inputs including geographically or organisationally distant knowledge not necessarily within existing firm scope or capabilities[1]<\/a>. Networks and partnerships have thus become critical in knowledge intensive industries and networks like financial services when relationships are used to acquire information[2]<\/a>.<\/p>\n

Barclays Accelerator Program is an example of a partnership between large traditional institutions and technology entrepreneurs. Through a 13-week accelerator program held in several cities worldwide in partnership with Techstars, Barclays crowdsources 11 new ideas in the financial technology sector and incorporates 11 selected new start-ups into its network every year[3]<\/a>. While Barclays externally advertises the program to be beneficial to the participating startups, Barclays is the main beneficiary by future-proofing itself from disruption and obsolescence via open innovation. The open innovation literature suggests that partnerships enable the exploitation of external knowledge and ideas to accelerate innovation and implementation[4]<\/a>.<\/p>\n

Anticipating Industry Disruption<\/strong>. Open innovation is first being used broadly for Barclays to acquire knowledge about new technology and the best potential applications to financial services. Incubator and accelerators also identify potential threats or industry disruptions faster than it would take a competitor to go to market[5]<\/a>. According to Michael Harte, Barclays\u2019 Chief Operations and Technology Officer, \u201cBy accelerating the development of groundbreaking products and services, we know that we can help to keep Barclays at the cutting edge of financial services, all while helping to revolutionize the industry\u201d[6]<\/a>.<\/p>\n

New Markets\/Products: Small and Medium Businesses.<\/strong> Growth is increasingly coming from open innovation[7]<\/a>. New players and partnerships drive growth by tapping new markets or creating new product categories[8]<\/a>. One of Barclays\u2019 strategic objectives is to be the \u201cbank of choice\u201d for small and medium sized businesses. Corporate accelerators strategically indirectly enable new markets[9]<\/a>. By opening up its human and technology resources to these startups, Barclays can determine which parts of their product and systems are compatible or incompatible with small busineses and adjust these accordingly to cater to the SMB sector.<\/p>\n

New Markets\/Products: Emerging Markets.<\/strong> In order to be the \u201cthe go-to bank across the globe\u201d, Barclays has developed emerging market access via its accelerator. DoPay, a Barclays Accelerator and now subsidiary firm, aims to provide digital payroll software services to companies in developing markets starting with Egypt[10]<\/a>. Through the innovation and subsequent mentoring and support process, Barclays learned how to leverage its current credit card infrastructure in emerging markets. It also allows Barclays an entry point into Egypt\u2019s underbanked population via a payroll product which is now an adjacent capability.<\/p>\n

Towards the Future: Artificial Intelligence.<\/strong> The 2018-2019 application call reflects Barclay\u2019s strategic exploration towards leveraging artificial intelligence in financial services. According to John Stecher, Chief Innovation Officer, \u201cWe are integrating AI and decision support technologies across our company in order to create better experiences for our customers and clients. I look forward to seeing how these ten startups evolve their business propositions and how they leverage AI in doing so.\u201d[11]<\/a><\/p>\n

Reverse Mentoring and Developing an Innovative Culture. <\/strong>As Barclays continues its journey towards innovative transformation, I would recommend it leverage its network of founders and entrepreneurs to influence the firm\u2019s internal teams to be more agile in identifying ideas and implementing them. Just as how the Accelerator Program provides entrepreneurs with Barclays mentors for scaling up their fintech ideas, these entrepreneurs are a strong source of reverse mentorship. Knowledge transfer and organizational learning literature mention that it is tacit knowledge, that is not explicit or codified, that builds capability and can drive innovation[12]<\/a>. Tacit knowledge is difficult to transfer because it is \u201ccontext specific\u201d and must be \u201cexperienced\u201d to be fully understood[13]<\/a>. As such, reverse mentoring programs should be able to more visibly disruption and innovation into the bank\u2019s strategy while deepening the partnership between startup participants and Barclays.<\/p>\n

Collaborating for Innovation?<\/strong> The literature on networks and organizational learning mention that knowledge and learning varies across different partnership types. See Exhibit 1. More knowledge and strategies are transferred when ties between parties are stronger, more enduring, and more formal. Crowdsourcing via accelerators remains a relatively weaker and more flexible form of partnerships. Additionally, Heinemann mentions that accelerators are unlikely to generate immediate short-term financial impact and is largely long term or strategic in nature. Thus, I would posit the following question for further manager consideration: When would it be better to use Barclay\u2019s Acceleration Program to incubate new startups versus integrating startups directly into Barclay\u2019s value chain? Versus a full startup acquisition?<\/p>\n

 <\/p>\n

Figure 1: Knowledge Exchange in Multiparty Collaboration[14]<\/a><\/p>\n

\"\"<\/a><\/p>\n

 <\/p>\n

(Word Count: 774)<\/p>\n

[1]<\/a> Contractor, Farok J., Vikas Kumar, Sumit K. Kundu, and Torben Pedersen. “Reconceptualizing the firm in a world of outsourcing and offshoring: The organizational and geographical relocation of high\u2010value company functions.”\u00a0Journal of Management Studies<\/em>\u00a047, no. 8 (2010): 1417-1433.<\/p>\n

[2]<\/a> Cross, Rob, Nitin Nohria, and Andrew Parker. “Six myths about informal networks-and how to overcome them.”\u00a0MIT Sloan Management Review<\/em>\u00a043, no. 3 (2002): 67.<\/p>\n

[3]<\/a> Barclays, \u201cBarclays Accelerator\u201d, http:\/\/www.barclaysaccelerator.com\/#\/about\/<\/a>, accessed November 2018.<\/p>\n

[4]<\/a> Chesbrough, Henry William.\u00a0Open innovation: The new imperative for creating and profiting from technology<\/em>. 性视界 Business Press, 2006.<\/p>\n

[5]<\/a> Kohler, Thomas. “Corporate accelerators: Building bridges between corporations and startups.”\u00a0Business Horizons<\/em>\u00a059, no. 3 (2016): 347-357.<\/p>\n

[6]<\/a> Mirvis, Philip, Maria Elena Baltazar Herrera, Bradley Googins, and Laura Albareda. “Corporate social innovation: How firms learn to innovate for the greater good.”\u00a0Journal of Business Research<\/em>\u00a069, no. 11 (2016): 5014-5021.<\/p>\n

[7]<\/a> Enkel, Ellen, Oliver Gassmann, and Henry Chesbrough. “Open R&D and open innovation: exploring the phenomenon.”\u00a0R&d Management<\/em>\u00a039, no. 4 (2009): 311-316.<\/p>\n

[8]<\/a> Bower, Joseph L., and Clayton M. Christensen. “Disruptive technologies: catching the wave.” (1995): 43-53.<\/p>\n

[9]<\/a> Heinemann, Florian. “Corporate accelerators: A study on prevalence, sponsorship, and strategy.” PhD diss., Massachusetts Institute of Technology, 2015.<\/p>\n

[10]<\/a> Lomas, Natasha. \u201cDoPay Banks $2M to launch a cloud payroll service for the unbanked.\u201dTechcrunch.com, April 30, 2014. https:\/\/techcrunch.com\/2015\/04\/30\/dopay-seed\/<\/a> Accessed November 2018.<\/p>\n

[11]<\/a> Zanoff, John. \u201cAnnouncing the 2018 Class of the Barclays Accelerator Powered by Techstars in New York\u201d. Techstars.com, September 10, 2018. https:\/\/www.techstars.com\/content\/accelerators\/announcing-2018-class-barclays-accelerator-powered-techstars-new-york\/<\/a> Accessed November 2018.<\/p>\n

[12]<\/a> Seidler-de Alwis, Ragna, and Evi Hartmann. “The use of tacit knowledge within innovative companies: knowledge management in innovative enterprises.”\u00a0Journal of knowledge Management<\/em>\u00a012, no. 1 (2008): 133-147.<\/p>\n

[13]<\/a> Van Wijk, Raymond, Justin JP Jansen, and Marjorie A. Lyles. “Inter\u2010and intra\u2010organizational knowledge transfer: a meta\u2010analytic review and assessment of its antecedents and consequences.”\u00a0Journal of management studies<\/em>\u00a045, no. 4 (2008): 830-853.<\/p>\n

[14]<\/a> Mirvis, Philip, Maria Elena Baltazar Herrera, Bradley Googins, and Laura Albareda. “Corporate social innovation: How firms learn to innovate for the greater good.”\u00a0Journal of Business Research<\/em>\u00a069, no. 11 (2016): 5014-5021.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cBy accelerating the development of groundbreaking products and services, we know that we can help to keep Barclays at the cutting edge of financial services, all while helping to revolutionize the industry\u201d – Michael Harte, Chief Operation and Technology Officer. <\/p>\n","protected":false},"author":11308,"featured_media":34269,"comment_status":"open","ping_status":"closed","template":"","categories":[178,1195,259,4239,447],"class_list":["post-34181","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-accelerator","category-crowdsourcing","category-fintech","category-open-innovation","category-partnerships","hck-taxonomy-organization-barclays-plc","hck-taxonomy-industry-financial-services","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2018\/","yoast_head":"\nFuture-Proofing Financial Services: Barclays Accelerator Program and Open Innovation - 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