Infosys has launched its Innovation in Retail Banking
2014 report. The sixth annual study, commissioned by Infosys and
conducted by Efma, surveyed over 100 retail banks around the
world. The latest report has revealed that more banks in fast
growing and rapidly developing markets display greater ambition for
becoming innovation leaders in delivering superior customer value.
They do this by investing more in research and development, compared
to their peers in mature markets.
The study also revealed that banks across the globe, especially
from more mature economies, are increasing their innovation
investments in 2014 compared to 2013 to keep pace with increasing
customer expectations and respond to new market entrants. While
new competitors include established technology companies and telcos,
there is increasing collaboration with start-up companies to help
drive innovation in banks.
Banks in emerging middle income and relatively high growth
countries (such as Brazil, India, Malaysia, Russia, South Africa and
Turkey) are more likely on average to have an innovation strategy, to
be aiming to become innovation leaders, and to be investing in R&D.
Banks are most concerned by the threat from technology companies
entering the market (for example Google, Apple and Facebook). The
threat from this type of competitor was rated high by 45 percent of
banks and has increased in the last 12 months. After technology
companies, the most significant threat is perceived to come from
telcos and from start-ups.
As part of their innovation strategies, 26 percent of banks
surveyed are investing in start-ups. Globally, 84 percent of banks
are increasing investment in innovation as compared to 2009, when
only 13 percent of banks increased investment. 61 percent of banks
indicated they have an innovation strategy, a significant increase
from 37 percent in 2009. 49 percent of banks are aiming to be
innovation leaders in their markets, whereas 38 percent of banks are
content to be fast followers. Channels continues to be the area
attracting most investments with 89 percent of banks increasing their
investments in this area. Many banks organize their innovation
activities around specific themes. “Mobility” is currently the
most important theme with 88 percent of banks rating the importance
as “high”. Closely following that are the themes of “Big Data”
(67 percent) and “Social Channels” (63 percent).
Michael Reh, senior vice president and global head of Finacle at
Infosys, said “One interesting finding of this year’s report is
that many banks in rapidly growing emerging markets, who are used to
generating profits from customers with smaller transaction values,
are at the forefront of innovation in retail banking. Lessons
on innovation from these banks could be extremely valuable to
financial institutions around the world as they compete with new
players in the market.”
Patrick Desmarès, Secretary General at Efma, said, “This year's
global retail banking study indicates more banks are adopting formal
innovation practices and developing their approach to open
innovation. However, there are still a large number of banks which do
not seem to have good basic practices, so there is plenty of room for
improvement. Working closely with start-ups is becoming more common
and we believe this is a positive trend. Interestingly, it is the
banks in fast growing and rapidly developing markets that are still
leading the way and showing more ambition.”
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