Infosys Finacle, part of EdgeVerve Systems, an Item subsidiary of Infosys, and Efma, a not for profit organization, launched the 10th annual study on innovation in retail banking. The report is written by Jim Marous, Publisher of the Digital Banking Report and Co-Publisher of the financial mark. Celebrating the 10th anniversary of the research, the report investigates a decade of banking innovation and looks ahead at what is in store for banking in 2022. The study, wherein over 300 banks practitioners reviewed a decade in banking innovation and also glanced into the future considered Open Banking APIs as the top technology to the future of innovation, with it being stronger than areas like machine learning, chatbots,and RPA[Robotic Process Automation].
The study found that in the brief term, banks will leverage Open Banking for compliance like the Payment Services Directive, Unified Payments Interface, and the New Payments Platform. Vincent Bastid, Chief executive officer, Efma, stated-In the last few decades, financial institutions have been facing disruption head-on, with advancements in client support, personalization, and mobile applications via a combination of Open APIs, AIs,and automatic learning. The 10th edition of the report highlights improvements made in the last decade, but additionally predicts a stunning transformation in mobile pockets[ like Amazon Go, Amazon’s checkout-free store, Barclaycard in the UK created Grab+Go, which transforms a shopper’s smartphone into a ‘pocket checkout’], payments,and lending. The research also highlighted that overall, organizations are taking a view on the need for innovation ROI.
31% of companies had an innovation ROI view of one year i.e. the time period for measuring success in innovation, compared to only 17% this year. Additionally, 63% looked for a Return on investment in 1-3 years as compared to 54 percent in the year 2017.
Bankers surveyed believed big-tech firms, digital commerce platforms and fintech start-ups will be the most innovative competition in 2022. Similar to past years, the most significant effect of transformation is likely to be in the regions of payments, mobile pocket,and lending at the next three decades of investment in Banking Innovation. With traditional technology being identified among the top few barriers to innovation, 74% of banks are increasing investment in technology modernization.
50 percent of the businesses believe that product delivery channels followed by new product innovations will be where innovation will take place in the next four decades.
On asking banking organizations what channels will be the most important in 2022, the majority saw mobile and online being the primary channels. The survey also highlighted branches and relationship managers as low rated indicating they may not be the preferred choice of future generations.
After present digital channels, digital assistants, social network and 3rd party channels are anticipated to be the main channels of the bank in 2022. Close to 50% of respondents consider that less than 40 percent of the current workload will move to the public cloud by 2022. According to 70% of the respondents, AI is anticipated to have a substantial influence in transforming client support / service by 2022.
On seeking an answer to a question about the impact of advanced technologies in the next 12 months, Open APIs were thought to have the largest potential impact (with a score of 5.68 on a 7 point scale).
As the report ends it sums up the most important highlight- Remember, it is not another bank that people want … it is a better experience. Tech giants could easily become a financial services hub to facilitate the relationship between consumers and traditional providers of financial services. However, as it may appear but Millennials “do not want another bank” and might give a try to a tech-giant for their banking services.
Here are KEY TAKEAWAYS
- The presence of an innovation strategy in the organization has increased by 6%
- For the nest four years, 50% of organizations stated that their primary area of innovation is product delivery channels
- Banking organizations are driving innovations primarily by partnering with business partners, start-ups and large tech firms.
- Most innovative for Bankers believe most innovative competition in 2022 would be with fintech start-ups, big tech firms and digital commerce platforms..
Image Courtesy – Edgeverve