Hackathons - short-term programming events using data, APIs and analytics to solve real-world problems are great for team-building, recruitment, networking and experimenting. But there is a growing sense that they are also contributing to banking innovation. Here are my observations on the subject.
Hackathons are a relatively cheap way to innovate
Larger, older organisations, such as banks, tend to find innovation harder. The culture slips into maintenance mode, rather than innovation, and it can be hard to move away from that. Hackathons, like accelerators or incubators, allow banks to make contact with developers. Developers, meanwhile, get to understand rapidly whether their ideas will fly. It's a win-win situation.
Hackathons allow banks to test their technology with developers
It can be hard to test APIs and ensure that they are usable. Hackathons mean that banks can share APIs with developers and assess their usefulness and compatibility. In addition they can (potentially) start to develop some new products to solve real-world problems, such as splitting the bill in restaurants, or even disrupting the car rental market.
Sponsoring hackathons allows banks to ask developers to focus on particular areas
For example, MasterCard and U.S. Bank sponsored a hackathon in 2016 around innovative products for small businesses. Societe Generale has sponsored several hackathons around the future of banking, including one earlier this year in Prague, with the broad subject of a bank of the future you can count on, wherever you are. This kind of theme shapes, but does not confine, innovation.
Hackathons can also improve banks' processes for sharing technology
In an pleasingly circular situation, hosting or sponsoring hackathons can also force banks to become more up-to-date in how they share their technology with developers, including the way they create APIs. U.S. Bank, for example, started to use Akana, a platform for sharing and managing APIs. They tested it in (what else?) a hackathon, and then moving to it on a routine basis.
Hackathons act as signals to larger developers
It is a moot point whether hackathons really give banks a serious return on investment. But whether or not any products emerge, hackathons are very effective marketing vehicles. They give big tech investors and developers the signal that the banks' APIs are open for business, and invite further activity.
Internal hackathons offer a way to bypass standard product development processes
Setting up an internal hackathon, can be a way to try to generate a more innovative culture, even if only for 24 hours. It brings together teams from across the business, including IT, customer service, and business units. These events encourage small teams to try a more agile way of working in a safe environment, where experimentation is encouraged and failure is tolerated. Like innovation labs, this offers a separation between innovation and business as usual that can enable diverse ways of working.
Hackathons can generate momentum for culture change
Hackathons, especially internal ones, can generate a lot of momentum among participants. If harnessed effectively, that can help to change the culture and make it more innovative and agile. One way to do this is to accelerate the move from prototype to roll-out for hackathon products.
Hackathons can be an effective way to bring new talent into the business
Like many other businesses, banks and financial organisations have not been slow to realise the potential of hackathons as extended interview processes. Deloitte Canada, for example, uses hackathons to see how people perform under pressure. They recruited about half of the developers it needed from an event called Hack the North in 2016.
Hackathons can be a way to tap into scarce talent, such as data scientists or analysts
It is generally agreed that there is a worldwide shortage of data scientists and analysts. As a result, only the most attractive employers get to recruit and retain these high-demand staff. While banks may not feature among the top ten employers for most data scientists, hackathons offer a way to tap into the talent resource without the need to recruit and retain.#Hackathons can be a way to tap into scarce talent resources such as #DataScientists and analysts . #banking Click To Tweet
Having several groups working on the same problem means being able to cherry-pick solutions
One of the important things about hackathons is that there are multiple groups working on the same problem, and therefore providing different ideas and solutions. Although the prizes must be awarded to individual groups, that does not mean that the bank cannot cherry-pick the best bits from several solutions.