At The Fintech Times we frequently encounter companies touting their latest products as ‘innovative’ that promise to ‘revolutionise’ the industry. While the allure of innovation is undeniable, the question arises: should organisations prioritise refining existing offerings through evolution before embarking on revolutionary ventures?
This was a topic of discussion at the recent Digital Insurance Summit Europe 2024 in London. During a panel focused on customer centricity in the insurance sector, delegates delved into the topic of innovation vs evolution with John Pyall, head of underwriting and product at Great Lakes Assurance SE, commenting: “I’m beginning to hate the word innovation. We’ve been saying that at conferences I’ve been to for the last six/seven years. What I want to see evolved policies – not just a massive internal project.
“Let’s use our culture to evolve properly.”
Sparking a debate between the panellists, the conversation went back and forth on what insurance firms should prioritise when looking to grow their businesses. Following the event, however, the question of innovation or evolution stood out. After all, it can be applied to the general fintech ecosystem, not just insurance.
We reached out to experts from across the industry to understand what they believed was more important – innovation or evolution.
Understanding what digital tech can offer
We chatted Pyall to further understand why he believed evolution was so important. He explained that there is a huge level of risk with innovation, especially in our post-pandemic, digital society. Many firms may see this as an opportunity to completely reinvent the wheel, however, Pyall suggests that what the digital society can provide is data.
Instead of working on a ‘revolutionary’ product which would take three years to develop, test and launch, he said that using the data available to firms as a result of the digital boom is how firms can best serve their customers. “We want to understand our customer’s needs. New digital touchpoints give us more data, which means firms can actually take on what their customers want and act on it.
“Evolution brings customers with us on our journey as we develop – giving them exactly what they want. Innovation is driven internally by what our internal needs and demands are, instead of what the customer needs.”
Echoing this view is Rich Arundel, chief evangelist for Currencycloud and Visa Cross-Border Solutions, who said: “We believe fintechs and the wider financial ecosystem must focus on evolving their offerings to customers’ quickly changing needs. And while that might not always be simple, set against a backdrop of rapid regulatory change and market volatility, it’s the businesses solving real-life problems for consumers that will no doubt stick around.”
ManyPets example
Pyall identifies a good example where evolution has better served a business instead of rebuilding through innovation. ManyPets is a pet insurance company that was founded in 2012 in the UK, and has now spread to the US and Europe. Pyall explained how the company had a very good core product, but when the insurance firm tried to veer away from just pet insurance and enter other markets, it did not see as much success.
This is because its customers were not looking for alternative insurance offerings – they were after pet insurance. Honing in on this offering instead and improving that product suite, evolving with its customers, saw ManyPets flourish. “Innovation in itself isn’t bad, but it has its place. The problem is that it has expanded to the point that the evolution of a product is no longer being considered as much.”
A balance is needed
The Fintech Times Podcast team discussed the topic during episode 141, in which Francis Bignell and Polly Jean Harrison agreed that evolution was more important for a company to find success. Meanwhile, Tom Bleach took a more neutral stance, pointing out the benefits of both.
Andrea Maria Cosentino, CEO of Impact Fundry, the strategic consultancy boutique and VC investor, shared Bleach’s view that a balance is needed.
“Innovation must be balanced with evolution. Fintechs must evolve their existing infrastructure, processes, and offerings to adapt to regulatory changes, customer preferences, and technological advancements. Evolution ensures stability, scalability, and long-term viability, providing a solid foundation upon which innovation can thrive.
“Ultimately, the key lies in striking a harmonious balance between innovation and evolution. Fintechs must innovate to stay relevant and competitive while evolving to maintain operational efficiency and compliance. By prioritising both aspects strategically, fintech companies can navigate the complexities of the financial landscape and drive sustainable growth in the digital age.”
Security in evolution
For some, one of the pillars of fintech is to disrupt the status quo and create out-of-the-box solutions. However, for Leo Farias, CEO and co-founder of Concepta Technologies, a web and mobile development for fintechs and banks, “opting for evolution – perfecting our strengths – is often the safest route”.
He adds: “This strategy reduces risk, strengthens the base, and ensures financial health, fostering growth that’s both steady and strategically positioned for future innovation. This careful balance not only secures your current standing but also efficiently channels resources toward possible innovation.
“Innovation is challenging and comes with greater risks. Yet, it thrives in a culture that welcomes new ideas and perspectives. By focusing on innovations informed by customer feedback and understanding of their needs, we achieve more than incremental progress; we make significant leaps forward. This focus ensures we’re not only evolving but also setting new benchmarks in the sector, making every advancement meaningful and directly responsive to the market.”
Redefining what’s possible
Risk-taking isn’t a bad thing in fintech, however. Job van der Voort, CEO and co-founder of Remote, a global HR unicorn and fintech company that enables businesses to consolidate multi-country payroll processes and pay global teams, explores this further: “Innovation, particularly in the fintech industry, is about more than just disruption or the introduction of groundbreaking technologies.
“It’s about shaping the future of finance, creating new paradigms, and redefining what’s possible in the realm of financial services. While evolutionary improvements are indeed important for meeting emerging customer needs and navigating regulatory changes, it is through innovation that we can truly transform the industry. It’s the innovative breakthroughs that have the potential to redefine customer experiences, create new business models, and open up unprecedented opportunities.
“Innovation allows fintech companies not just to adapt to the changing landscape, but actually to shape it. By being at the forefront of innovation, we can lead the way in defining the future of financial services, delivering unparalleled value to our customers, and staying ahead of the competition in the ever-evolving fintech industry.”
Innovation isn’t invention
“For me ‘managed innovation’ as a working model is the best way to be evolutionary,” said Rory Yates, chief strategy officer at insurance platform provider EIS.
Explaining what he believes the difference between the two is, Yates said: “Innovative companies constantly feed on deep human insight and technology trends, adopting and adapting to these easily. Between these two points is where you achieve a degree of foresight, and continue to be a pioneering market leader. Which all Fintech’s aspire to be.
“The collision between what we tend to think of as innovation and a business model that’s more evolutionary is that typically innovation is fulfilled separately to the core organisation. This gives the freedom needed to explore new value potential without legacy constraints.
“However, this has often failed because at some point it has to integrate back into the mothership to utilise strategic assets like access to customers, or the general ability to scale the solutions identified. For born digital fintechs this would be a bad sign, as it would tend to indicate that they haven’t built truly data-fluid, intelligent, customer-centric architectures.
“MACH-based businesses are all about providing the right degrees of adaptability needed to make innovation the working model of the modern fintech or insurtech business. Built with the same technology and design as Amazon or Netflix, this allows them to continuously innovate and operate like a software business – continuously improving, taking advantage of new value opportunities, and competing better as a result.”
It’s not a case about picking what is better, it’s about picking what is necessary
Nikita Lomov, CEO of Altos, a research company for fintech investment platforms, noted the differing priorities for companies at different stages in their growth.
“Fintechs operate in a landscape defined by rapid change and fierce competition. For incumbents like banks, the path forward lies in evolution. They must adapt their traditional models, embracing technology and agility to become fintechs themselves (back in 2019, a16z asserted that every company would become a fintech company anyway). This evolution is vital for survival in a market where consumers increasingly demand seamless digital experiences.
“On the other hand, emerging fintech companies face a different imperative: innovation or obsolescence. The market rewards those who can swiftly introduce novel solutions, whether through groundbreaking technology, inventive distribution channels, or innovative monetisation strategies. Without continuous innovation, these newcomers risk being overshadowed by more agile or larger competitors.”
Some risks are worth taking
Jon Morgan, CEO of Venture Smarter, the business development manager, is completely in favour of innovation. He states that firms must set the pace, not respond to it.
“For me, innovation takes the cake. You see, in an environment where technological advancements occur at a breakneck pace, standing still equates to moving backward. It’s not merely about keeping up with the competition; it’s about setting the pace, defining industry standards, and fundamentally reshaping the financial technology landscape. Innovation isn’t just a buzzword; it’s the lifeblood that propels us forward.”
Francis Bignell
