Exploring Open Innovation in Retail Banking

Open innovation is a promising approach in the competitive banking sector. This study examines the factors that affect its application, revealing a complex interplay. It contributes to understanding how open innovation can manage complexity, foster innovation, and ensure long-term competitiveness.

Exploring Open Innovation in Retail Banking

A deep dive into the dynamic factors that hinder or facilitate open innovation practices in the retail banking sector.



Open innovation has emerged as a promising approach to fostering innovation in the highly competitive and rapidly evolving retail banking sector. The study examines the factors that impede or facilitate the application of open innovation in the context of retail banking. By examining both internal and external factors, the study reveals a complex and dynamic interplay. Consequently, the study contributes to a comprehensive understanding of how open innovation practices can be effectively applied to manage the sector's complexity, foster innovation, and ensure long-term competitiveness.


In the context of rapid technological advancement, intensifying competitive pressure, and evolving customer expectations, the retail banking sector has a pressing need for innovative solutions. However, a highly regulated environment, conservative corporate culture, and hierarchical organizational structure underscore the sector's unique characteristics and the challenging position in innovation management. To fully exploit the potential of open innovation, it is therefore crucial to understand the factors that either impede or facilitate its application.


The study identified a number of influencing factors that result in complex interdependencies. Internal barriers include organizational and cultural resistance, regulatory and compliance challenges, and resource limitations. In contrast, internal drivers such as strategic fit, internal innovative power, and access to new knowledge accelerate open innovation. From an external perspective, competitive pressure, changing customer needs, and networking motivate banks, while differences in the organizational culture and the immaturity of potential partners present challenges. The findings further reveal that organizational aspects, strategy and trends in innovation management can influence the multi-layered dynamics of the process.

Implications for Practitioners

· Align innovation strategies with core business objectives is seen as a promising approach to rapidly generating added value and ensuring support from top management.

· Although the benefits of open innovation are recognized by experts, the application is often hindered by cultural conservatism. Fostering a supportive organizational culture that allow change, encourages experimentation and tolerates failure is therefore crucial.

· Leveraging external collaborations with start-ups, FinTechs, and academic institutions helps banks gain fresh perspectives and access new technologies. Furthermore, participating in networks is seen as additionally beneficial to learning from best practices and profiting from synergies.

· The necessity for internal clarification and the implementation of high security standards is a direct consequence of regulatory requirements. Combined with the complex IT infrastructure of a bank, this results in a lengthy time frame before a project can be implemented with external partners. To ensure a faster time to market, sandboxes are highly valued for facilitating simple and efficient testing.


The study employed a qualitative exploratory research design, utilizing semi-structured interviews with innovation management experts from various Swiss retail banks. As the research topic required individuals with a high level of expertise in innovation management in a banking environment, the interview partners were selected with purposive sampling. The data was analyzed using an inductive categorization approach by Gioia et al. (2012) to identify key themes and build a theoretical model. This methodology allowed for a deep understanding of the dynamic factors influencing open innovation, providing actionable insights for both theoretical and practical applications.