Compasses vs Maps: Why Banks Struggle with Innovation

When it comes to innovation, banks crave certainty. The language of boardrooms and executive suites is awash with talk of “roadmaps,” “frameworks,” and “best practices.” They want maps—detailed, proven pathways that chart the course from point A to point B with minimal risk and maximum predictability. But innovation isn’t cartography. It’s exploration. And for exploration, you need a compass.

The allure of maps is understandable. Banks are institutions built on risk aversion, with systems optimised for managing uncertainty, not embracing it. Maps provide the illusion of control—a step-by-step plan that can be replicated, measured, and scaled. The problem? When it comes to innovation, the terrain is constantly shifting. What worked yesterday could fail spectacularly tomorrow.

Why Maps Don’t Work

Consider the fintech boom over the last decade. Challenger banks, embedded payments, and decentralised finance have all disrupted (or will!) the traditional banking model in ways no roadmap could have predicted. Those who thrived weren’t following detailed maps; they were navigating by compasses, guided by broad principles like customer-centricity, speed, and adaptability.

Banks that cling to maps often find themselves following a well-trodden path that can lead to irrelevance. They adopt “innovation labs” and “agile methodologies” not as tools for exploration but as checkboxes on a predetermined list. The result? Incremental improvements at best and missed opportunities at worst.

The Compass Mindset

A compass doesn’t tell you where the end of the journey lies, but it does point you in a direction. It demands conviction, curiosity, and a willingness to course-correct as you learn more about the landscape. In banking, this means focusing on questions like:

• What emerging behaviours are reshaping customer expectations?
• How can we experiment quickly and cheaply to learn what works?
• Which assumptions about our business model are worth challenging?

Take Stripe as an example. Rather than following a map for payments innovation, they used their compass to zero in on developer-friendly APIs and a seamless user experience. Their direction was clear: make payments invisible and accessible. The specific steps evolved along the way.

Banks Need Better Explorers

For banks to truly innovate, they must abandon their obsession with maps and embrace the uncertainty that comes with navigating by compass. This shift requires more than just new tools or processes—it demands cultural change. It requires empowering teams to test, fail, and pivot without fear of reprisal. It means rewarding those who chart new paths, even if the final destination is unclear.

The irony is that banks already understand this principle in other domains. When investing, they rely on macro trends and probabilistic thinking rather than hard guarantees. In lending, they assess creditworthiness based on imperfect information. Yet, when it comes to innovation, they insist on a level of certainty that doesn’t exist.

The Journey Ahead

The financial services industry stands at a crossroads. Emerging technologies like generative AI, blockchain, and embedded finance are redrawing the boundaries of what’s possible. There are no maps for this new territory—only compasses.

Banks that embrace this reality will navigate toward growth and relevance. Those that cling to their maps will find themselves stuck, forever searching for a roadmap to a future that has already passed them by.

In the end, the choice is simple: be an explorer or risk becoming a relic.