In the financial services industry, the focus of innovation has been undergoing a profound transformation. Traditionally, technology-driven innovation was considered the core driver of industry growth. Financial institutions prioritized technical capabilities, launching new products and services that often emphasized features over the actual needs of the customer.
However, as customer expectations become increasingly diverse and sophisticated, banks are realizing that truly sustainable and valuable innovation must be customer-centric rather than solely technology-driven. Rich Clow, Head of Innovation and Strategy at Bank of America, recently shared his observations and practical insights in an interview on the Banking Transformed podcast. According to Clow, traditional banks that can balance cutting-edge technology with the preservation of customer trust will gain a clear advantage in the evolving financial ecosystem.
Clow emphasizes that financial innovation is shifting from a “technology-first” approach to a “customer-first” mindset. This requires banks to first understand the real needs of their clients and then design solutions that are scalable, sustainable, and broadly adoptable. This shift is evident not only in retail banking but also in services for corporate clients. Effective innovation, Clow explains, is not about making incremental improvements—it is about achieving meaningful progress in customer experience and operational efficiency. This applies both to in-house solutions and to partnerships with broader financial ecosystems. Tools like Zelle and other embedded payment platforms, for instance, exemplify how banks can enhance convenience for customers while remaining central to financial transactions.
Bank of America has also adopted a flexible strategy for balancing digital and human services. Clow notes that the bank offers a variety of self-service options, from loading cards into digital wallets and setting up bill payments to initiating cross-border wire transfers. For customers interacting with a service for the first time, guided experiences are provided. For example, the bank recently redesigned its mobile wire transfer workflow, integrating step-by-step guidance and real-time status tracking so customers can easily monitor the process. Meanwhile, the virtual assistant Erica supports users by answering questions and providing context-aware assistance during transactions. This combination of digital convenience and human support enables customers to benefit from efficiency without sacrificing access to personalized guidance.
Embedded finance is reshaping the competitive landscape and opening new opportunities for traditional banks. Clow explains that embedded finance involves integrating payment capabilities directly into non-financial contexts, such as ride-hailing apps, online shopping, or food delivery services. While fintech startups may excel at creating seamless user experiences, banks remain essential for handling the underlying settlement of funds. By participating in these embedded scenarios, banks can extend their reach, reinforce their core role in financial transactions, and explore new revenue streams.
The development of inter-account and real-time payment technologies allows banks to provide more flexible transaction options, meeting consumer demands for immediacy. Many customers now prefer account-to-account payment models, similar to the top-up systems offered by coffee chains like Starbucks or mobile payment apps like Block and Cash App. Globally, such solutions are increasingly challenging traditional debit and credit card methods. However, Clow stresses that technology alone is insufficient; the speed of transactions must be matched by robust security, transparency, and user experience. Without this balance, even the fastest payment system will fail to satisfy customers’ trust and convenience requirements.
Trust remains at the heart of banking innovation. Customers expect fast and seamless transactions, but they also demand safety and reliability. Clow emphasizes that banks must maintain system resilience and layered security while providing clients with self-service tools that empower them to resolve issues independently. The rapid growth of online payments carries inherent fraud and risk challenges. U.S. banks, including Bank of America, have invested heavily in services like Zelle to ensure high availability and secure transactions, thereby reinforcing trust.
Generative artificial intelligence (AI) is another area gaining attention for its potential to enhance financial innovation. Clow highlights that the real value of AI lies in addressing customer pain points, not in technological novelty alone. In corporate accounts receivable management, for example, payment data is often complex and fragmented. AI can automate reconciliation, optimize workflows, and reduce operational friction. Similarly, in personal financial management and savings planning, AI can analyze data and provide personalized recommendations to help clients achieve life goals, such as home ownership or funding education. Customer-focused AI applications not only improve service efficiency but also foster stronger engagement and loyalty.
Risk management in innovation is evolving from a “risk avoidance” mindset to a “risk management” approach. Clow notes that at Bank of America, compliance and legal reviews are incorporated from the conceptual stage of new products, ensuring both market relevance and regulatory adherence. Take “Buy Now, Pay Later” (BNPL) services as an example: while some consumer demand exists, data analysis reveals that the core user base is limited, with varying repayment behaviors that require careful credit risk assessment. This nuanced approach allows banks to balance innovation with security, delivering new services while safeguarding financial stability.
Clow also shares career advice for newcomers to the financial industry. He suggests starting in customer-facing roles to gain firsthand understanding of client needs, experiences, and feedback—insights that form the foundation of effective innovation. Maintaining curiosity and a forward-looking mindset, staying updated on emerging technologies and market trends, and experimenting with new tools are all essential for career growth. These experiences not only benefit individuals but also supply banks with a continuous stream of innovative ideas.
The broader financial ecosystem is undergoing rapid transformation. Mobile payments, real-time clearing, embedded finance, and AI applications are presenting unprecedented challenges and opportunities. Banks that chase technology without considering customer experience and trust risk losing ground. Conversely, institutions that strike a balance between digital convenience and human support, and optimize the interplay between innovation and risk management, are poised to lead the market. True innovation is not about adopting every new technology but about solving meaningful customer problems in a scalable and sustainable way.
Industry collaboration is becoming increasingly critical. By partnering with fintechs, payment platforms, and non-financial enterprises, banks can embed core services into broader experiences. For example, by integrating real-time payments into retail, transportation, and healthcare platforms, banks create seamless experiences while gaining insights from transaction data. Such cross-industry collaboration enhances customer satisfaction and generates additional revenue opportunities, reinforcing the bank’s strategic position in the financial ecosystem.
Looking ahead, the success of financial innovation will depend on a bank’s ability to harmonize technology-driven solutions with customer-centered design. True innovation must be purposeful, meaningful, and sustainable, enhancing both customer satisfaction and trust. Technology serves as a tool, not an end in itself, while understanding and addressing customer needs remains the guiding principle. Banks capable of implementing customer-centric innovation, responding flexibly to market dynamics, and maintaining rigorous risk oversight will command competitive advantage in the coming years.
Bank of America’s practices illustrate that innovation involves more than launching new products or technologies—it requires a cultural and philosophical shift. Banks must establish innovation processes centered on customer problems, ensuring that each product iteration or service improvement delivers tangible value. At the same time, maintaining humanized service in the digital era ensures that customers enjoy convenience without compromising security or personal attention. This approach is applicable not only to retail banking but also to corporate and cross-border financial services, providing a solid foundation for long-term global growth.
In summary, the financial innovation landscape is experiencing a profound shift, moving from purely technology-driven initiatives to customer-centric, value-oriented strategies. Banks that understand client needs, foster trust, manage risk, and apply technology to real problem-solving are positioned to excel in a competitive environment. The leaders of the future will not merely be the most technologically advanced institutions but those that deeply understand customers, deliver sustainable value, and adapt with agility to complex ecosystem dynamics.
The ongoing evolution of embedded finance, real-time payment systems, AI-driven tools, and cross-sector collaboration demonstrates that innovation is as much about mindset as it is about technology. Institutions that cultivate a culture of customer-first thinking, integrate human insight with digital capabilities, and proactively manage risk will define the next era of banking leadership. In this increasingly interconnected and fast-paced financial environment, the ability to innovate thoughtfully, responsibly, and sustainably will determine which banks emerge as true leaders in both domestic and global markets.