Since 2015, we have been assisting in a new trend among banks consisting of organizing hackathons. Is this just a hype or does it bring real value to banks? The answer is hackathons allow banks to achieve something they don’t know to foster well internally: innovation.
Actually, this difficulty is not only met by banks but by any large organization. Their internal structure is too heavy and too silo-focus to be innovative.
Innovation requires a free mind, a disruptive approach and a rejection of the status quo. That’s also the reason why innovation is also a matter of generation: young generations are ready to eat up the world and challenge the habits and comfort of the older ones to move forward and embrace the new opportunities offered by the ever-changing society.
So, hackathons bring those missing pieces to the puzzle: young highly talented and innovative people with a free mind to think outside the box, while banks can provide the structure and resources needed—both human and financial.
So, what is a hackathon?
A hackathon is an event of co-creation with startups. Innovative startup individuals are brought together in a room to build teams who have to challenge the status quo and come up with new business ideas while leveraging technology. The goal is to solve key customer service issues in banking, finance and personal insurance.
How long is a hackathon?
A hackathon usually lasts more than 24 hours. Some hackathons even last three days.
Food and beverage are provided by the bank, including lots of energizing drinks. When it comes to sleep, no bedroom, simply couches, mattresses and tables. To relax, music, baby foot, ping pong tables, flipper, and drones are the most popular games.
Who pays for the hackathon?
Banks pay for the event. As this event brings in high-skilled developers, there are sponsors financing part of it, mostly Digital companies such as Google, Facebook, Twitter who identify and attract the best developers. We can also see logos of API Management vendors such as Axway or IBM.
How big are the teams?
Teams are made of four to six participants. An important requirement is that the teams are not prearranged, they are built onsite with people who don’t know each other to foster teamwork and innovation.
Which profiles does it require?
Candidate teams need multiple skills to succeed: UX designer, UI developer, back-end developer, business expert …
Does the bank provide assistance?
Yes, the bank provides access to internal expertise made of IT architects, marketing experts, and API experts. They also provide tools to assist with development.
Which tools do banks provide?
They often provide an API Portal for developers; this contains a library of APIs about user information, cash account information, account transactions, creating and managing test data … Most of the time, API Portal are delivered with Analytics to measure the traffic used by those APIs and by every developed application.
What do the winning teams get?
The winning teams get prizes, mostly money. There is no thumb rule but usually, the team with the best solution will be awarded between 10.000€ and 30.000€. The second and third teams receive minor prizes of about 5.000€.
Who is evaluating the projects?
Team projects are evaluated by a panel of judges made of internal bank experts and an advisory board.
What are the evaluation criteria?
There are multiple criteria to evaluate the projects:
- Ability to identify and explain the problem they are trying to solve.
- Value proposition: does the solution has the ability to make the customers’ and/or employees’ lives better?
- Scalability: can the solution scale to serve millions of customers?
- Use of the bank APIs (often optional): does the solution make use of the bank API to perform a piece of business functionality?
What are the challenges for the contest?
Most challenges are about the future of the digital payments—what will the management of money look like in 2020 for example. They are also about leveraging existing data, digital channels, platforms and partnerships which power the bank’s existing financial services business.
How to organize a hackathon?
This is an event and must be organized as such. It requires proper planning, communication, and media coverage. The goal is to attract the best talents and also to work on the brand image of the bank.
There are a few companies specialized in organizing hackathons that are worth to contact to turn this event into a success.
Read all about how Axway triumphed at Cardinal Health’s SMASH Hackathon