by Alan Verschoyle-King, Global Head of Financial Institutions (FI) Payments at Western Union

Technology is transforming the world of finance. It’s encouraging new players to enter the market and inspiring different ideas and ways of thinking. While some established players are reinventing themselves to stay relevant, the need to collaborate with new disruptive start-ups to drive innovation across the sector, and into other industries, has never been greater. Here are the four main drivers of innovation that businesses of all sizes need to consider in the bid to stay relevant.

Attracting the Next Generation of Talent

To encourage innovation, businesses need to create environments that allow them to thrive. Having a diverse workforce, with a melting pot of opinions, cultures, religious beliefs, genders and skills, is a must in doing so. How can we solve problems, or come up with new ideas, if our employees all come from the same background, share the same beliefs, or have the same skills set?

Within this, there is an even greater need for businesses to attract the next generation of talent: the millennial workforce. By 2025, three in four of the working population will be millennials according to Deloitte. This is a generation that has grown up in a world driven by technology – the youngest millennials were aged 11 when the first iPhone came out – and they want to work for businesses that are tech-savvy and connected, just like them. Traditional companies risk losing out on the best talent because they’re not adapting their ways of working to suit the changing needs of the global workforce.

But when companies do manage to tap into the millennial workforce, the rewards are there for the taking. A Western Union example of this is when we developed our digital offering. To do this, we gave the team in charge the time to succeed as well as the freedom to fail, along with a ring-fenced investment budget. Importantly too the team itself was diverse with people from all age groups and backgrounds.

Nurturing Change

To enable innovation and stimulate creativity, businesses also need to establish a workplace that welcomes change. One way of doing this is through implementing a platform on which employees can raise ideas about new innovations and developments – when we feel we’re able to challenge and influence, we’re less likely to resent the innovation or development.

Incentives are also crucial. If we can see for ourselves the benefit of proactively suggesting new innovations – whether that’s through money, promotion, praise or an impact on the community – we’re far more likely to invest time and energy into channelling our creativity. A well-motivated workforce is more likely to drive change.

Encouraging Collaboration, not Stifling Competition

Encouraging internal creativity and nurturing intrapreneurship is not the only way we can facilitate the plethora of young talent coming through in the business sector. Seeing innovative start-ups as partners rather than competitors is also a must.

Incumbents, such as banks and traditional payments companies, have in the past seen the emergence of digital disrupters and new entrants in their sector as a threat. At Western Union we are fervent supporters of collaboration, rather than competition. Thankfully, this is a trend that the industry is increasingly waking up to, with more than four in five (82%) financial services and FinTech executives expecting to increase FinTech partnerships in the next three to five years according to PWC. PayPal’s recent partnership with HSBC is a great example of this in action, as is Fitbit’s collaboration with Santander.

In part, the ability to collaborate comes from the confidence of knowing the value that well-established companies hold for young disruptive FinTechs. While traditional players can learn to incorporate new ideas and informal business structures, the disruptors can gain from accessing established global networks and years of regulatory experience and expertise.

For example, today Western Union helps three in four UK universities take payments from Chinese students through tech platforms like WeChat by partnering with FinTech Geoswift, which is the market leader for payments into and out of China. Through our partnership, both of us are able to offer our customers an even better payments experience by increasing scale and capability.

Interpreting Innovation

Underlying all of these points – from encouraging creativity in all businesses, to choosing collaboration rather than stifling competition – is that constant focus on innovation: a word that is frequently overused and sometimes misunderstood.

It’s worth remembering that innovation comes in many forms. Important too is the need to differentiate between creativity and innovation. Unlike creativity, innovation does not just happen, it needs to be facilitated. I would therefore encourage businesses to consider having a separate team to help support the creation and development of new ideas – not the source of innovation, but the vehicle that helps to cultivate it.

It is this encouragement and facilitation of innovation – whether in a big business, a small startup, or a partnership between the two – that drives real change and continues to improve all of our services, all with the ultimate aim of better serving our customers.

Alan Verschoyle-King is Global Head of Financial Institutions and Partner Channels at Fortune 500 company Western Union.