Efma and Infosys Finacle are proud to present the 10th annual ‘Innovation in Retail Banking’ report. After a decade of charting the development of innovations and business models in retail banking, this year’s study is a milestone that marks just how far the industry has come – and how new technologies are still driving transformation. We also look ahead at what’s in store for banking in 2022.
Customers remain at the center of banks’ innovation efforts as organizations across the industry move to improve digital customer experience across new touch-points and channels. In line with this, we found that delivery channels are the key focus of innovation, with most banks saying that mobile and online will be the primary distribution channels in four years’ time.
In terms of product innovation, we found banks focusing on payments, mobile wallets and lending as the most important areas of banking. These are also the three areas where non-traditional financial institutions pose the biggest competitive threat.
A lot more banks are taking a longer view of returns from their investment in innovation compared to last year’s report. We also found banks prioritizing an ‘innovation culture’ as the primary driver of innovation. More banks now have an innovation strategy place, although growth is slow in this area. Banks are using a variety of approaches to support their innovation efforts. Notably, we’ve seen a significant increase in the desire to partner outside their organizations compared to previous surveys, as banks realize that internal development may not be enough to deliver the speed and customer-centricity they’re aiming for.
Banks across the world see open banking APIs as the top technology for the future of innovation, ahead of artificial intelligence and machine learning, chatbots and other technologies. But we haven’t yet seen the full impact of open banking, as banks are still considering a range of objectives for how they will use it. While banks in this year’s survey believe they are well positioned to use open APIs, conversational interfaces, cloud processing and mobility/wearables, we found an ongoing lack of readiness to leverage advanced analytics and machine learning – a factor that could inhibit other technology advancements and innovation efforts.
Looking ahead at 2022, banks continue to see platform-based competitors such as Amazon, TechFin firms and fintech organizations as the innovation leaders. We also found an increasing awareness of challenger banks as competitors compared to last year, while non-fintech or banking firms and incumbent banks were seen as the least threatening.
We would like to thank all the banks that participated in our 10th innovation survey and agreed to be interviewed for the study. Not only do they provide invaluable insights into retail banking innovation today, they also contribute to a bigger picture of the industry’s innovation over the past 10 years. We hope that our readers find this study informative, inspiring and useful.
Keywords : Innovation , Bank Products & Services