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Innovation in retail banking 2010 21 September 2010

The scope of this second annual report on innovation in retail banking has been extended to include the Middle East and Africa which provides some interesting and valuable perspectives. From the research, we can see signs of banks emerging from the crisis, with many banks increasing their investment in innovation in 2010 compared to 2009. 

There are numerous new examples of product, channel and process innovations, as well as cases of start-up and established banks adopting innovative business models. Banks have a particular interest in the question of how to deliver a better and more consistent customer experience. It is the combination of product, channel, process and customer relationship management innovation, together with other innovative changes to the business model, which will drive the improvement in customer experience. There are several cases in the report which illustrate this. An increased emphasis on customer-focused innovation is also very clear this year with new approaches like crowd-sourcing being adopted to bring the customer into the innovation process. Many banks said they are trying to do a better job of using customer insight to guide their product and service development. 

The challenges for retail banks in the least developed countries of Africa are in stark contrast to the challenges for retail banks in the more mature markets of Europe. Nevertheless, the way that banks in developing countries are using new technologies and business models illustrates how innovation has a key role to play in any situation and offers some lessons for all retail banks. In fact, some of the banks in the least developed countries are leaders in branchless and mobile banking innovation. 

This report was prepared, on behalf of Efma and Finacle from Infosys, by Michael Pearson of Clarus Investments. 145 banks from 50 countries contributed to the research this year, either by completing an online survey or by participating in an interview. A presentation of this report's main findings will be delivered in Rome at the Efma 38th Congress on Friday 22 October 2010.

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