Bankers’ greater commitment to innovation combined with anecdotal evidence that many have pulled back from new ways of doing business may come from how bankers define “innovation” and “commitment.” In many contexts, the term “innovation” suggests dramatic changes to technology or business choices over a short period of time that put the innovator far ahead of its market. It can be hard for bankers to make the leaps to large-scale change, and they may mistake iteration — which is much safer — for innovation. Not defining innovation well makes it difficult to commit to it.

To accurately define innovation, understand its implications, and act on it, bankers will need to avoid platitudes and keep their focus on what matters most to their bank’s success. Froth around flashy technology and chatter about poorly understood buzzwords may sway board meetings away from business fundamentals. Successful innovation of any kind is ultimately a product of business strategy — careful boards think backward from concrete business outcomes to the technology and operations that will support them.

Instead of asking, “What is our innovation strategy?” boards may want to ask, “What business metrics should we move, and how will we move them?” Broad options include growth of the business and greater efficiency — which may not be tied directly to a novel business model or radically new technology. To the extent that business choices enable attracting deposits, expanding the loan book, and sourcing fee income — and technology choices help manage long-run costs — novel approaches may be warranted. Bankers must measure their returns effectively and manage risk, compliance, and governance.

Innovation in most corners of banking moves slowly because it must. Shiny objects — ideas that are popular but don’t have a robust risk-mitigated business case — are the biggest pitfall. A greater commitment to innovation for most banks will likely mean being unafraid to consider new things in their business planning and the dedicated pursuit of transformational projects and business choices that are outside the norm.