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Finding the right mix: Innovation in financial services with Mauritius Commercial Bank 21 December 2021

Vishal Ramphul, Innovation Management Lead at Mauritius Commercial Bank, speaks about the principal role the bank’s culture plays throughout its innovation processes. 

The role of innovator in banking is not an easy one - how do you personally approach the challenge? And how does your institution think about innovation with all of the existing challenges, threats, and legacies in the industry?

In the banking industry, digitalization and innovative technologies are causing unprecedented disruption, and the pace of change is accelerating. Failure to innovate leads to stagnation, which can lead to a loss of market share. I firmly believe that a culture supporting both responsible risk-taking and trust is necessary for innovation. Leaders should imperatively encourage forward thinking, implement creative ideas, and foster a culture of innovation. If we want an innovation culture, we have to start by building a trust culture. The role of trust is indispensable for collaboration and innovation growth. It not only brings the required social capital resource to build the right environment for strong networks but also powers exploration of new opportunities and paths.

As the longest-standing and leading banking institution in Mauritius, MCB has a rich history and strong commitment to customer service and excellence. Undoubtedly, innovation is key to being able to meet existing challenges and threats as well as equipped against unforeseen ones from a dynamic changing market and ever-growing customer needs. Building an innovation culture necessitates new forms of governance, aligned organizational structures and agility in teams to adapt faster and deliver better results.

Since 2018, MCB embarked on its Digital Transformation Program to deliver a world-class customer experience through digitalization, thus bringing fluidity and ease across customer journeys and making banking more seamless. MCB’s Innovation Lab is another initiative whereby innovators have a space to get their hands on the newest technologies, contribute through research and creativity, and propose new solutions to both customers and employees. We are continuously looking for new ways to innovate and we are aiming to organically create and scale innovation through culture and business practices across all our lines of business.

As financial institutions build their digital agenda, it is imperative they find the right mix between fintech cooperation, innovations labs, open programs and internal processes. How do you approach this in your institution? And how do you see this evolving in the coming years - will we see more innovation plugged into banks from the outside or innovation built from the inside? 

There is no denying that the changing financial landscape will come with its fair share of opportunities and challenges. Having a well-defined strategy, being powered by the right skillset and mindset, and having great partners and collaborators onboard are some of the key aspects to be considered.

MCB has been working regularly with both local and international partners to look for areas of collaboration with fintechs that can enable a seamless digital customer experience and to benefit from their technological advancements. In addition to being actively engaged in industry and academia, MCB has been organizing internal and external hackathons to promote disruptive innovation. The internal hackathon engages MCB staff in a competitive yet fun environment that acts as a breeding ground for new product ideas, creative services? and solutions, while maintaining an innovative corporate culture. The external hackathon is open to the public and holds great potential to tap into unbanked talents and uncover outside innovations while reinforcing MCB’s innovation strength through diversity.

The Covid-19 pandemic has increased the demand for digital financial services and innovation in the banking sector has proved its value to society. Banks must continue to scale technology rapidly to remain competitive in the Covid-context that has reshaped the world we live in, the real challenge here will be to find the right mix of internal disruptive innovation and contribution of new entrants.

There is a clear trend of fintech startups becoming the new digital tech providers for banks, replacing current tech suppliers. Do you see the same trend in your institution? How do you think IT departments need to evolve to accommodate this? 

Partnerships with fintechs can help both banks and their consumers in a variety of ways. Fintechs often have more modern solutions than traditional vendors and are often more focused and going deeper in a particular product or service. Fintech collaborations can enable banks to offer a cutting-edge solution that improves the overall client experience by providing the tailored and digital-only experience that our customers expect. Determining whether to partner with a fintech is not a decision that should be made lightly. Working with a fintech to address a problem or fill a technology gap requires a fine balance between losing some control over the entire user experience and, perhaps, the customer relationship. The customer journey should always be top-of-mind. When done right, fintech partnerships can play a role in growing the bottom line and facilitating innovation.

Regarding the evolution of the IT department, it is imperative that we shift from conventional methods to building the capability required to run a scalable agile business model and the ability to integrate new financial technologies in our existing business. Here, to note, upskilling and training will be the key drivers to enhance internal workforce competencies. 

Additionally, the IT department also needs to undergo a transformation to be better equipped to take banks to the forefront of innovation and constructively benefit from widespread disruption.

Testing and piloting is one thing, bringing innovative solutions to market is far more complex. What is your experience and opinion based on how your institution delivers solutions? In your opinion, how can financial institutions succeed in bringing real innovation to the core business?

The customer is at the heart of everything we do. Any transformation journey starts with the customer and the solutions designed and built according to their needs. While many banks have already undertaken digital transformation initiatives intended to increase internet and mobile banking adoption, banks are now also embracing emerging technologies such as artificial intelligence, the cloud, and analytics to manage rising operational costs, evolving customer expectations, and cybercrime. At the end of the day, it is all about prioritizing which solutions and innovative customer experiences will keep customers coming back for more while also allowing us to compete head-on with our competitors.

Real innovation can be brought to the core business only if financial institutions adopt the discovery driven innovation concept which is nothing but simply thinking the way consumers think and be able to translate that into a product/service that consumers actually need. It is easy to create new ideas, but the real challenge is the process of materializing an idea into something that is of great value. 

In what areas do you think we will see the fastest innovation applied to mainstream services? Retail? Commercial? SME? Private Banking? And why?

The Covid-19 pandemic has accelerated further digitization in the banking sector. Customer expectations have shifted as the amount of physical interactions has decreased and customers have grown accustomed to managing their financial needs online.

Undoubtedly, retail will undergo a major customer and workforce transformation because it is frequently data-driven and process-intensive. Many emerging technologies including robotics and AI are accelerating and converging, giving rise to exciting new ways to serve banking customers. We will be seeing a lot of change in retail, private, and SME banking in the next decade. Also, in the medium term new financial networks will heavily disrupt commercial banking.

Digital transformation impact across the universal banking business model will ultimately follow paving the way for further innovation. 

Join Vishal Ramphul and his peers in charge of innovation at financial institutions. Contact Dorota at dorota@efma.com to join the Efma Future Innovation community.

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