Innovation in retail banking 2015 04 November 2015

Efma and Infosys Finacle are proud to present the seventh annual study of innovation in retail banking. The theme of this year’s study is industry disruption and how banks can effectively work with start-ups to boost their innovation performance. There is a general feeling that ongoing changes in the industry will have profound implications for established retail banks in the next few years. The rapid evolution of disruptive technologies and disruptive business models is now starting to have an impact on the day-to-day business of banks. We cannot predict when the tipping point will be but it is essential for banks to be prepared. These developments, however, do not have to be only a threat. There are opportunities for banks to collaborate with innovative start-ups which can help to drive innovation and transformation. More and more banks are setting up accelerators/incubators, or are working with independent accelerators/incubators. There is also a trend towards investing in start-ups either through dedicated venture funds or on an ad-hoc basis. Start-ups are not necessarily just competitors and we are also seeing more examples of banks partnering with start-ups to launch new products and services. This brings its own challenges and banks need to be flexible in their policies and recognise differences in culture and approach in order to make these partnerships work. Investment in innovation has been increasing consistently for the last few years at most banks according to our surveys. There are signs that this investment is making a difference in that innovation performance is also perceived to be improving. Although many challenges remain, we have certainly come a long way as an industry from the dark days of the global financial crisis. We have noted before that when it comes to innovation, there are common themes across all regions of the world, and across developing and developed countries. It does not matter if you are in Brazil or South Korea, you will see many of the same innovations in retail banking. Of course there are always national differences due to regulations, industry structure and consumer behaviour, but the overall trends are quite similar. We hope that you find this study useful and look forward to continuing to monitor significant developments in retail banking innovation on your behalf in the future.

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