One of the things we’ve heard over and over again recently is that now is not the time for adventures in banking. Rather, as one former regulator put it recently, “It is time to go vanilla.” This is largely in response to a tough regulatory environment, which has led to major crackdowns on anything novel in banking, following the collapse of Silicon Valley Bank in 2023. But what does that mean exactly? Is innovation dead? Perhaps not — perhaps it is just time for innovation itself to “go vanilla.”

The idea behind this is that there are innovations that are not particularly adventurous, and progress can be made under any conditions as long as it is concentrated in the right fields, and approached with the right risk-reward mindset. In the spirit of this possibility, here’s a look at a few decidedly less flashy areas where we continue to see activity:

Core modernization. Just 3% of US bank executive respondents to CCG Catalyst’s US Banking Study in 2023 said they had no plans to pursue a core system upgrade if they hadn’t already. This is likely because execs realize that a modernized core (whatever that means to your bank) is and will be critical to competing in a technology-driven future. Importantly, core modernization doesn’t have to include a major, risk-laden overhaul; it can be done through a phased, managed approach suitable for an individual bank’s appetite.

Data analytics. Data analytics represent the building blocks for artificial intelligence (AI), but an ability to leverage a bank’s stores of data to drive better insights and develop more holistic views of its customers is a long-standing imperative, and one that remains in focus. In fact, 80% of respondents to Bank Director’s 2024 Technology Survey said their bank’s leadership team and/or board discussed allocating budget or resources to data analytics in the last 18 months, making it the top choice selected.

Payments. With FedNow around for over a year, joining The Clearing House’s RTP, it’s galvanized the conversation around real-time payments. Adoption is promising, though it still has a way to go — over 900 financial institutions (FIs) are currently FedNow participants. But more interesting is intent: Also from Bank Director, 84% of respondents said they believe it is important to offer real-time payments to retail customers, 85% said so of small businesses, and 81% said so of mid-sized commercial clients. Meanwhile, service providers are ramping up their own capabilities to help smooth adoption.

It would be very easy to give in to analysis paralysis while waiting for clarity. But in the uncertainty, there’s an opportunity to innovate in smart ways. The above represents only a small subset of those ways — other areas may include digital account opening, modernizing risk and compliance, etc. Think, foundations. Eventually the pendulum will probably swing back in the other direction, toward more progressive innovation (AI is coming, like it or not). But, when that happens, those best positioned to capitalize on that reality will be those who used this time get their house in order.