Hackathons are good for open innovation

Participating in hackathons is part of an open innovation mindset and culture. Since 2016, Arion Bank has heavily invested in digital banking services and adopted an internal program for developing those services. Arion’s approach on innovation has impacted the way the Bank delivers new services. Product development is more rapid, efficiency in services has increased and employees are more aware of technology and innovation, which in turn affects the way the Bank regards problem solving when it comes to products and services. 

Arion Bank is the main sponsor of the Nordic Health Hackathon, hosted at Reykjavik University. Participants mostly come from the Nordic countries and their challenge is to develop health related products by using open APIs from various sources. Arion will host a challenge where participants shall show “novel use of financially related data to help people lead healthier lives”, and exposes an API from transactions and enriched transactional data.

Innovation is part of Arion’s genome

Investing in innovation may seem obvious. Still, many companies have difficulties overcoming the obstacle of why, how and where to innovate. In other words, on an operational level, it requires a conscious and enlightened management decision to systematically invest in innovation. Arion started investing in local startups in Iceland via its accelerator programs, Startup Reykjavik (2012) and Startup Energy Reykjavik (2014). Through these two accelerators, Arion has invested in 90 startups (and counting).
As of 2016, Arion uses its internal accelerator, Digital Future, to develop and launch new digital financial services. The results in increased usage, better customer journeys and improved efficiency behind those services have been staggering. In the same year, the Bank was the first financial institution in Iceland to host a hackathon where open APIs with transactions, payments and other features were made available to participants. A dozen teams hacked away for 36 hours in Arion’s headquarters.

Open innovation the next step

The experience from investing in startups and carefully changing the approach on developing digital banking services has impacted the view on how and where to innovate. No bank will be able to catch up with all the new technologies and new business models that e.g. FinTechs have to offer. The only way forward is therefore to embrace these technologies and work with the more nimble companies that usually develop highly niched products or technologies. Arion has taken this to heart. Banks and insurance companies on an international level that have chosen the open innovation route know, however, that it’s tricky. So much can go wrong when startups and banks work together. The spread in decision making speed, processes, culture, security criteria, etc. is extremely wide. One better have a plan to systematically deal with the gap in expectations and the factors mentioned above.

Hackathons connect people and companies

Understanding new technologies and business models is a prerequisite for open innovation. So is being open to different approaches than one is used to. That’s why Arion Bank supports, participates in and hosts hackathons. Meeting people and companies with different mindsets and problem solving is refreshing, a source of inspiration and potential new talent and concrete business models. That’s what open innovation is about.