Infosys Finacle-Efma research shows 78 per cent of banks becoming more customer centric through reimagining banking practices
Infosys Finacle, part of EdgeVerve Systems, a product subsidiary of Infosys (NYSE: INFY), and Efma, a global not-for-profit organisation today launched the eighth annual study of ‘Innovation in retail banking’. The research revealed that 77 per cent of banks regard the threat from technology companies, start-ups, retailers and/or telecom players as high or very high. Over half now consider the threat from technology companies and start-up challenger banks as significant.
However, the research, in which 158 banks from 56 countries participated, showed that banks have largely embraced digitisation and are aggressively adopting new technologies in order to innovate. The proportion of banks with an innovation strategy has increased to 74 per cent in 2016, from only 37 per cent in 2009. In addition, banks are now more likely to collaborate with startups in order to stay competitive, with nearly three quarters (73 per cent) seeing them as the best way to leverage new technologies.
- The vast majority (86 per cent) of banks believe that emerging competitors will have a significant impact in the payments area
- Additionally, 73 per cent of banks consider working with innovative start-ups as the best approach to access disruptive technologies. Meanwhile 41 per cent are collaborating with startups as suppliers, 32 per cent are making direct investments into startups, and 27 per cent are running accelerators and incubators
- For half of the banks surveyed, legacy technology environments are the biggest barrier to digital transformation, followed by a lack of unified vision (44 per cent) and a lack of skills and expertise (38 per cent)
- Three quarters (74 per cent) of banks now have an innovation strategy in place and more than two-thirds (69 per cent) believe they are becoming more innovative; but the proportion of banks increasing innovation investment has fallen to 78 per cent from 84 per cent last year
- The most disruptive new technology for banks is advanced analytics and big data, with 79 per cent of banks claiming it is having a significant impact now or will have within in the next two years. This is followed by mobility and wearables (75 per cent) and open APIs (69 per cent)
- A fifth of banks are launching or considering launching a digital only bank as a strategy for dealing with digital transformation
- Open API Technology is seen as a major development that will have a high impact on the industry over the next two years, especially with local compliance forcing banks to open their payment systems
Vincent Bastid, CEO, Efma:
“This year’s global banking study shows that banks have resolutely turned to start-ups to drive their own digital transformations. However, banks are being held back by old legacy systems and are still divided on where and how much to invest. Banks should think globally and embrace new ways of doing business.”
Sanat Rao, Global Head of Infosys Finacle, EdgeVerve:
“Changing customer preferences, rapid evolution of technology and pressures from outside of the traditional banking world are accelerating a major transformation of the banking industry. The confluence of these forces is putting digitisation at the center of technology renewal, enabling multi-channel touch-points for superior customer service. From the research findings and customer interactions, it will likely be the development of open API’s, AI and blockchain that shall cause the next big change in banking.”