| | AUGUST - 20238CIOReviewIN MY OPINIONINNOVATION THROUGH SCIENTIFIC EXPERIMENTATIONBy Omar Abduljalil, Director, Strategy and Digital Transformation, RBC Capital MarketsIn his book, `Think Again', Adam Grant showcases the power of thinking scientifically, where we accept how little we know and consistently rethink our understanding of the world based on new knowledge from hypotheses and experiments. While there are times where the three other mindsets of preaching, prosecuting, and politicking might be relevant, performing digital transformation as a scientist is critical. Some of the largest multinationals have massive R&D budgets to test novel concepts and products, while financial institutions tend to be more cost-conscious when it comes to innovation, particularly around selecting the right strategic platforms in the short, medium, and long-term. Firms like RBC, Fidelity, and Blackrock are industry-leading for their successful investment strategies, but due to their successes in running low-cost experiments before spending millions of dollars on technology investments. So, what does running an experiment look like at a bank? Do we need white lab coats and glass beakers? Proof-of-concepts are the most common types of experiments, with your organization likely already completing several this year. PoC's could be a good tool if you want to efficiently test how a "new technology" such as AI or distributed ledgers fit within your existing architecture, or if you need to filter past the salesmanship and marketing materials of prospective vendors by running a bake-off based on your success criteria.Alternatively, you can also run a proof-of-value or PoV where you have little to no doubt on the solution capabilities but need to validate the prospective benefits and ensure you have an accurate business case. Thirdly, scenario analysis or simulations offer a relatively low-risk option to test the feasibility of new solutions or changes. Regulatory bodies, such as the Canadian Securities Administrators (CSA) have regulatory sandboxes that offer fintech's seeking to offer innovative products and services an opportunity to test their applications throughout the Canadian market while obtaining exemptive relief from securities laws requirements.Omar Abduljalil
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