Surely it means that successful innovation solved significant customer problems that unlocked substantial value downstream. So, the return to the innovator was a small percentage of a much bigger number than if the innovator hadn’t solved a significant problem, or had simply stuck to the status quo.

From a consumer standpoint, retail banks have essentially stuck to the status quo because they only view the world through the lens of their own products, and only try to solve their own immediate problem of how to sell more of those products at lower cost. So any innovation has been in the back-office, which may have lined the pockets of IT firms and individual specialists, I guess. Yet the theory referred to here should mean that if banks focused their activities on solving customers’ problems, they’d stand to make more money and – more importantly today than ever – create much more value in the wider economy.

This is a great time for government policy to focus the banks on solving their customers’ problems in a highly innovative way.