When order becomes the enemy of innovation: Banking’s controlled chaos | Opinion

The banking industry has been perfecting control for decades: process flows certified by regulation, risk teams scanning every corner, plus vast systems designed around stability. If banking were a spacecraft, its autopilot would be set and its mission clear. 

In this kind of environment, transformation won’t come from outside. For banks, it will come from within, through controlled chaos with small, independent teams inside banks, freed (within reason) to experiment. That framing challenges the cherished story about banks remaining high-walled fortresses forever, resisting disruption.

The paradox of banking’s strength

Banks today run enormous operations, manage compliance demands, and oversee complex governance. Not surprisingly, they have grown adept at control. And yet this strength is also a weakness. Because the moment you build systems to minimise every risk, you also minimise room for experimentation (and failure).

Large enterprises can innovate. But only if they create zones where trial, exception, and deviation are permitted. In banking, the challenge is especially acute. Institutions face strong incentives to maintain control, to preserve trust and stability, and are wary of letting loose experiments that might undermine reputation or compliance standing. 

But that very caution prevents them from asking: “What if we allow small pockets of controlled disorder? What if we grant a few mavericks latitude to act like a startup inside the bank?”

Why “controlled chaos” is the necessary next step

The concept of chaos here may sound alarming. But what we’re really talking about is a state of productive tension as a space between total consistency and free-wheeling disruption. The idea meets reality, internal autonomy meets external constraints. In complexity science, this is often called the “edge of chaos”, a sweet spot where adaptive systems flourish.

In practical banking terms, this means a team operating within a bank that thinks like a startup with fast cycles, minimum viable products, and user feedback. The team that deliberately finds friction and uses that friction to learn what the system can handle, not simply accepting what the system currently tolerates. And yet, it operates under the bank’s umbrella of governance and compliance. 

Friction is not the enemy; it’s the signal of possibility. Without it, you’re simply refining what you already do instead of discovering what you could do.

Internal venture units: The hidden force for banking reinvention?

Banks don’t have to wait for external fintechs to upend the system. They can build internal venture units or skunk-works that sit within the institution but operate with startup logic. 

These internal ventures differ from external startups: they draw on the bank’s capabilities (brand, compliance, distribution), but simultaneously escape its inertia. When done well, they create a dual operating model: one side keeps the conventional banking engine humming, the other side peers into the next horizon.

These internal units become probes into new business models, new customer behaviours, and new technology areas. They just allow the institution to reclaim agency over its own transformation instead of outsourcing it entirely to external disruptors.

Lessons from the banking career

I saw firsthand how risk-aversion gradually becomes risk-fear. A small product glitch triggers board-level scrutiny — the atmosphere changes. “Let’s just not try anything that could fail.” That mindset kills more ideas than any competitor. I realised how difficult it was to overlay startup energy onto bank bureaucracy.

Today I see the other side. When a team is allowed to build, to test, to break, to report transparently, it becomes a lab for innovation while still respecting the bank’s core business. It results in experimentation with tokenisation, AI-driven finance, and nascent asset classes — real explorations of what the bank could become.

Why traditional disruption narratives miss the point

Much commentary around fintech assumes banks will be disrupted from the outside. But banks remain deeply profitable, heavily capitalised, and embedded in the economy’s plumbing. The smarter bet is not on extinction, but on reinvention from within. 

In fact, uncertainty and innovation interact in surprising ways. Some suggest that innovation alone does not guarantee improved performance, but only when paired with adaptive structures and governance does it actually matter.

What this means: you cannot simply unleash chaos and hope for the best. You must design for it. Pick the team, set governance, allocate budget, define metrics, and shape a clear mandate.

Building the right architecture for internal movement

There are no shortcuts. Designing a venture unit inside a bank comes down to choices: structure, governance, funding, metrics, and culture. For banking, special attention must go to compliance path-threads, information security fences, and reputational thresholds. Plus freedom to pilot, fail, and learn — at the same time. 

Give the team psychological safety. Let them know that early failure is part of learning. Define clear boundaries, but ambiguous enough to explore. Allow them to ask “what if?” not just “what now?” Build robust feedback loops: test small programmes, measure what the bank standard cannot, adjust quickly, iterate boldly. 

The highest density of innovation emerges not in chaos for chaos’s sake, but in this transitional “edge” region.

The stakes: Who will stay relevant?

As tokenisation, web3, AI, and embedded finance are accelerating, banks that cling solely to control may wake up to irrelevance. But simultaneous control and experimentation — that is where the future lies. Embedded finance, for example, is now changing how financial services will be delivered and consumed.

The more control you insist on, the more innovation you suppress. The more you insist on perfect programmes, the more you delay real learning.

Banks that embed maverick units will not just survive, they will lead because they will know how to explore new business models, how to partner with growing communities (gaming, tokenised assets, digital natives), and how to launch ventures that are client-first, technology-enabled, and institutionally credible.

Conversely, banks that treat innovation as a one-off project or outsource disruption indefinitely will miss the structural shift. For the next cycle of value in finance will accrue to those who restructure inside, not to those who hope to wait it out.

What I advocate is not chaos for chaos’s sake. It is controlled chaos, a deliberate design of tension inside the system, an autonomy within alignment. It is responsible exploration.