Innovation in retail banking 2016: The emergence of new banking business models 25 October 2016

Efma and Infosys Finacle are proud to present the eighth annual study of innovation in retail banking. The theme of this year’s study is the emergence of new banking business models and how disruptive technologies are driving the latest developments in the industry.

We are seeing a continuation of recent innovation trends with banks making innovation a strategic priority and investing more to boost their innovation performance and counter threats from new players. While start-ups can be one of those threats, working in partnership with innovative start-ups has become a wellestablished strategy over the past couple of years.

Disruptive technologies are helping to accelerate the digitalization of banking and also to spur changes to banking business models. We are only just starting to see the impact of these and expect that the changes will accelerate over the next 2 to 3 years. We are already seeing a large number of start-ups and established banks launch digital only banks which can operate off a much lower cost base and provide a very different customer experience.

Regulators are also pushing for changes in the industry and are forcing the pace for the development of open APIs. These will allow new players to develop innovative services and again force banks to consider their business models. The good news is that banks are responding and more are opening innovation labs and investing in research and development.

Our study is a global study and it is striking that developments are so similar across the world. Of course there are differences in some emerging markets where infrastructure is less well developed and hence the focus is on innovation in mobile payments and basic banking services, often led by mobile operators as well as banks. Nevertheless, there are interesting examples of disruptive technologies being deployed in these markets such as machine learning in credit scoring applications.

Finally, we would like to thank all the banks who participated in the innovation survey and who agreed to be interviewed for the study. These insights are invaluable and we hope that our readers find the study to be of practical use.

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