Banks must embrace experimentation if they are going to keep pace with customer expectations and the speed at which start-up financial service providers operate.Bankwest's chief executive of enterprise services and chief information officer, Andy Weir, said consumers were now registering a stark difference between the level of services they were getting from start-ups compared with those from traditional financial services businesses. Speaking at FST Media's Future of Banking conference in Sydney yesterday, Weir said banks should be worried about the rise of new players that were sidestepping traditional financial processes and extracting value that once belonged to banks.Banks needed to "embrace the threat" by speeding the development cycle - but this demanded a fresh approach to innovation and development, he warned."Big monolithic projects running for three to six months aren't good enough. We have to have feature-based delivery rather than projects," Weir said.However, he acknowledged that most organisations had entrenched cultures which did not encourage this approach, and that transforming into more agile teams was not a trivial exercise.He said Bankwest was three years through a transformation initiative, which was embracing lean and agile start-up methodologies that rely on testing and experimentation throughout the development cycle.Weir said that this new approach to development need not be prohibitively expensive. Two recent applications developed for Apple iOS7 and Android devices had cost less than A$1 million but had been very well received by consumers.Bankwest has also initiated day-long hackathons, which give free rein to developers for limited periods - an approach widely used by software companies to flush out new ideas.  Weir said Bankwest's hackathons had gathered together up to 500 people for a 24-hour period to pitch ideas and then work on the resulting products or solutions. So far, 12 hackathon products had been put into production, but, he said, "This is not about ROI, but driving the culture."