Banking Innovation: From Underground Guerrillas to the Invisible Future

What truly drives banking innovation: knowledge hidden deep within the organization, competition dictated by tech giants, or radically transforming user expectations? During Budapest Fintech Week, we examined the future of financial institutions from two perspectives. While Joren Scharn’s (Rabobank) presentation showcased the liberation of internal innovation, the roundtable discussion featuring him, Nicole Stroj (Raiffeisen), and István Fetter (CIB) analyzed market strategies and technological pressures. From mobilizing internal potential to achieving Amazon-level customer experience: here are the most important takeaways of banking transformation.

 

One of the most painful paradoxes of the corporate environment is that while organizations spend millions of dollars on external consultants, true innovation potential is often lost in-house, at the level of daily operations. The presentation by Joren Scharn, Rabobank’s Head of Digital Strategy, offered a practical answer to this exact dilemma: he demonstrated how to channel what he calls "underground innovation" – knowledge spontaneously emerging from the depths of the organization – into official operations. The bank’s approximately 8,000 engineers encounter problems every day to which they could provide simple yet high-value answers, but their enthusiasm usually hits structural walls. In the maze of strict hierarchy, idea owners cannot find decision-makers, lack time for development amidst daily firefighting, or simply lack executive sponsorship. The Dutch expert’s presentation focused on the methodology used to systemically save these initiatives, which conceal millions in business value, from ending up in the void.

When searching for a solution, the banking team chose a path typical of the startup world: instead of launching an expensive major project requiring years of executive approval, they experimented with the creative recycling of available resources. The goal was to create a mechanism that brings these hidden, underground ideas to the surface without disrupting the bank’s critical daily business. To achieve this, they mashed up best practices from three completely different industry players: they adopted the concept of "citizen development" from the Dutch nutrition and agricultural giant Nutreco, where prototypes can be built without deep programming knowledge; they integrated customized learning paths from enterprise education leader Skillsoft; and they borrowed the technological framework itself from Spotify. This hybrid approach allowed the system to be educational, technologically stable, and user-friendly all at once.

The most creative step of the project was undoubtedly the selection and transformation of the specific platform. They based it on Spotify’s open-source Backstage system, fundamentally used for building developer portals, but the team set their sights on a module originally developed to simulate a pet store. They replaced the products lining the virtual shelves – such as dog food and blankets – with innovation ideas, and swapped "purchasing" for resource allocation and expert support. Thus, the Nexa Labs internal marketplace was born. The platform consciously built on the psychological mechanisms of social media – likes, shares, comments – to generate organic buzz around ideas. This allowed project validation to happen on a broad community basis before consuming significant resources, thereby democratizing the innovation process.

The Psychology of Failure and the Necessity of Validation

Nexa Labs' financial model was also unconventional: development cost the bank practically zero euros, thanks to agreements Joren Scharn referred to as a "cow trade" – essentially barter or budget-neutral partnerships. The team realized that boldness and a strong negotiating position could replace a thick budget. The prime example was the deal with Spotify: the bank didn't pay money for the software but instead handed over the intellectual property generated, the developed code, and test results acquired in a corporate environment in exchange for a free license. Following similar principles and based purely on professional engagement, they managed to ensure that collaborations with Nutreco and Skillsoft were also 100% free. This approach proved that cost-effective partnerships can be established even in the most strictly regulated financial sector if the bank is willing to use its knowledge and network as currency.

During the platform's live operation, an important parallel soon emerged: the pitfalls of internal corporate projects are eerily similar to the reasons for market startup failures. According to international statistics, about 70% of early-stage startups fail, driven by three main factors: lack of market need, running out of cash, and team dynamics issues. Nexa Labs aimed to remedy these at a systemic level. Engineers are often prone to falling in love with the solution instead of the real customer problem, so the platform forces early validation through community feedback and rapid iterations. "Running out of cash" was eliminated by the project's zero-budget nature and use of internal resources, while the third, perhaps most critical point – team dynamics – was handled by encouraging "cross-pollination." Teams organized on a friendly basis often fail due to missing competencies; however, the system helps technology experts complement themselves with colleagues possessing business or marketing knowledge.

The Rabobank case study pointed out that innovation doesn't necessarily require infinite resources, but rather courage and smart process organization. Bringing "underground" ideas to the surface not only increases the company's competitiveness but also employee satisfaction. Specialists receive the opportunity to experiment within official frameworks, at the expense of their weekly four-hour learning time (L&D budget), so innovation doesn't come at the cost of daily work but becomes an organic part of professional development.

The Amazon Effect and the New Standard of User Experience

In the next session of the conference, a panel discussion moderated by András Rung, founder of Ergomania, shifted the focus from internal processes to ruthless external market pressures. During the discussion, it became clear that banking innovation is no longer something to boast about in marketing brochures, but often the key to survival. The financial sector is forced to play in a field where the rules and user expectations are no longer dictated by competitor banks, but by global tech giants. Nicole Stroj, Head of Innovation at Raiffeisen Bank International, described this phenomenon as the "Amazon Effect" and the power of digital habit.

The expert pointed out: as private individuals, regardless of generation, we have all become accustomed to speed and immediacy. When scrolling through TikTok or ordering from Amazon with a single button press, the experience is frictionless, fast, and infinitely simple. This conditioning fundamentally rewrites our subconscious expectations regarding financial institutions as well. If a webshop can deliver a product the next day, or if we can track our dinner’s route in real-time on a food delivery app, it is psychologically difficult to accept that a bank transaction takes days. In the eyes of the modern user, this delay is no longer a sign of security but clearly bad service – even if complex risk analysis in the background justifies it. Stroj’s conclusion is that banks have no choice: they must pick up the gauntlet and, in terms of user experience, "become a bit like TikTok."

István Fetter, Head of the Small Business Division at CIB Bank, supplemented this technological pressure with the perspective of ESG (Environmental, Social, and Governance) and broader cultural impact. For an international giant like Intesa Sanpaolo, simply generating profit is no longer enough in the 21st century; it must also exert a measurable positive social and environmental impact. In this reading, innovation means not just developing shiny new app functions, but being a tool through which the bank can operate more sustainably, ethically, and by serving the real, deeper needs of clients and society. Banking innovation thus exists in a double bind: it must simultaneously answer the need for speed dictated by consumer impatience and the strict new requirements of social responsibility.

Defensive Tactics and the Battle of "Speedboats"

Regarding strategic approaches, Joren Scharn outlined an interesting dichotomy between defensive and offensive innovation. Defensive innovation is primarily about risk avoidance and protecting market share, while offensive is about shaping the market. The Rabobank expert illustrated with an interesting example that the digital rush isn't mandatory for everyone: he mentioned a Dutch insurance company that consciously decided not to innovate but to operate exactly as it did in the 1960s. This retro, hyper-personal, paper-based approach – much like the renaissance of vinyl records in the music industry – can be a distinctly attractive, premium service for a certain, more conservative client base. This example highlights that digital transformation is not the only path to salvation in every segment, although it is undoubtedly inevitable in the mass market.

In the large corporate environment, however, innovation is most often a sequential necessity: if the market moves, the bank must follow. This is where neobanks like Revolut, N26, or Bunq come into the picture. The panel participants unanimously agreed that these players are not enemies to be destroyed, but the "lazy big banks'" best sparring partners. According to Joren Scharn, the emergence of neobanks is the best thing to happen to the sector in the last decade because competition forced modernization and woke up the sleeping giants.

The strategic response, however, is not necessarily the servile copying of neobank functions, but the launching of "speedboats." If a traditional, sluggish big bank wants to be as agile as a fintech, it is worth creating a subsidiary or spin-off company. This new entity is free from the burden of corporate bureaucracy but enjoys the parent bank's capital strength and the trust provided by the "Powered by Rabobank" label in the background. Nicole Stroj added to this train of thought that the future likely points towards "multi-banking": clients keep the safe big bank for their savings, but use a sexier, faster fintech solution for daily transactions in parallel. The task for banks is to find their place again in this fragmented space.

The Reality of AI and the Regulatory Tsunami

One of the most instructive parts of the discussion was the clarification of the role of Artificial Intelligence (AI). Although the banking sector spends one of the highest amounts globally on AI development – since, as Nicole Stroj pointed out: "banks are actually data companies" – the location and method of return are often completely misunderstood by the public. Joren Scharn described the situation two or three years ago with a metaphor: large consulting firms arrived at banks with their AI solutions like an overzealous fire truck crew wanting to extinguish a house that wasn't even on fire. Everyone wanted to develop new, AI-driven value propositions and futuristic products for customers, while the true power of the technology does not lie there. In reality, the true field for AI today is not dazzling customers or forcing generative chatbots everywhere, but "automation on steroids" – that is, the brutal increase of internal efficiency.

The regulatory tsunami crashing down on banks – compliance, Anti-Money Laundering (AML), and Know Your Customer (KYC) – is now unmanageable with purely human resources. In 2024 alone, regulators burdened Rabobank with 3,333 new rules and requirements, averaging nine (!) new regulations per day. The bank previously hired two thousand people just to handle these, but for sustainable operation, nearly 90% of processes had to be automated. In this environment, the use of AI is not an innovation luxury but a fundamental condition for operation; without algorithms, meeting these expectations would be impossible.

However, István Fetter drew attention to the specifics of the Hungarian market, which is also a serious Service Design lesson for the region. Advanced AI and digital processes are in vain if the regulatory environment demands physical presence. In the Hungarian reality, applying for a Babaváró loan or CSOK, or the finalization of corporate lending, requires a personal appearance before a notary, representing an analogue obstacle – a friction point – that technology cannot leap over. Digital islands are already working, but for an end-to-end digital experience, the regulatory side must also grow up to the technology.

Blockchain, Agentic AI, and the End of Work

Diving into the technological deep layers, Joren Scharn highlighted the future role of Agentic AI in IT operations. Modern banking systems now resemble, in his words, "cloud spaghetti": an opaque, tangled mess of servers, nodes, cloud services, and APIs forms the infrastructure. In this complexity, human supervision is no longer sufficient. AI, however, is capable of anomaly detection – for example, immediately flagging if 100GB of data suddenly flows between two servers instead of the usual 1GB. Moreover, in the future, autonomous agents could even fix these problems without the customer noticing anything, ensuring invisible but critical stability.

At the end of the discussion, participants looked into the distant future, and surprisingly, it was not AI but blockchain technology that took center stage in transformational predictions. Joren Scharn firmly stated that while AI increases efficiency, the true structural transformation of the financial sector will be brought about by blockchain. However, he highlighted a dangerous knowledge gap: in his experience, barely 10% of banking top executives actually understand how the technology works. Yet, in the fields of international settlements and Decentralized Finance (DeFi) – specifically lending – blockchain will lay down completely new monetary rails within 15 years. The competition is sharp: if Wise and similar fintech players do not push SWIFT out of the market within 5 years, they have failed.

Nicole Stroj expanded the vision towards Digital Identity and communication between agents. She raised the possibility that in the future, perhaps not humans, but their AI agents will bank with each other in the background. This scenario creates entirely new UX/UI design challenges: how do we design interaction and interfaces for a software bot? At the same time, Stroj emphasized that human-centered design remains eternally valid because, at the end of the chain, even through digital intermediaries, the real needs of a flesh-and-blood human must be met.

The most philosophical – and simultaneously most ironic – moment of the discussion was brought by István Fetter with his "post-work" vision regarding the future of labor. In a thought experiment spiced with dry humor, he outlined a world where production and services are performed by robots, and work becomes mere nostalgic therapy. In this intentionally absurd scenario, people will pay to attend an adult daycare where they can play in an office environment similar to their ancestors, sit in meetings, and wear important titles. The closing thought, however, pulled the audience back to reality: as Joren Scharn reminded everyone, the profession least threatened by robotics is that of the plumber. The role of banks may transform into invisible infrastructure, and data may be handled by robots, but solving the complex, unpredictable problems of the physical world will remain a human privilege for a long time to come.