Strategic innovation, or business model innovation, is a high priority for banks. This research has brought forth various concerns and benefits of innovation, as seen by 89 European banks. Banks have taken advantage of market growth and consumer attitudes, and have benefitted from the use of relatively new and flexible IT systems. There also seems to be plenty of scope for incremental innovation to make continuous improvements.

While a bank’s innovation strategy should be determined by its business strategy there are several generic factors which also have an impact:

• Market specific factors (stage of development, regulation, culture) and company specific factors (market share, ownership, resources) provide a framework for understanding some of the innovation issues which any particular bank will face
• Innovation is seen to be even more important for improving efficiency than it is for generating growth
• IT is believed to be very important for innovation but is also perceived to be a barrier by many banks, either because of inflexible systems or lack of resources
      – Many banks in survey are investing in more flexible IT systems
• Investment was not seen as a particularly high barrier in spite of the financial crisis
• Regulation and compliance was seen to be a high barrier to innovation for banks in Western Europe and Russia & CIS, but less for banks in Central & Eastern Europe