Finacle from Infosys and Efma presented the key findings of their 5th annual report — ‘Innovation in retail banking’ study, at a webinar conduced on 22nd Oct’2013. The study, based on a global survey of banks and interviews with senior bankers, investigates how banks can overcome barriers to innovation and improve their innovation capabilities, as well as banking trends
Polkadot JAM Slides - Token2049 - By Dr. Gavin Wood
Finacle Webinar – Innovation in Retail Banking 2013
1. Global Innovation Trends in Retail Banking
Efma Webinar, October 2013
Michael Pearson, Efma Strategic Adviser
2. Speakers
Attendees control panel:
Patrick Desmarès
Secretary General
Efma
Michael Pearson
Senior Retail
Banking Adviser
Efma
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3. Introduction
• 5th annual study of retail banking innovation
• 150+ banks from around the world participated in the research
• Focus was on how to overcome barriers to innovation
• Study measured of deployment of various channel innovations
4. Agenda
• Innovation strategy and performance
• Overcoming barriers to innovation
• Digital channel innovations
• Innovation case studies
5. Many successful business leaders have claimed that
innovation is essential for growth and value creation
“As I’ve looked at a number of industries,
virtually all the value gets created by innovation.
At our company, all of our revenue growth was
either organic innovation or it was through
acquisition, and acquisition was a platform for
future innovation.”
AG Lafley, Chairman & CEO, Procter & Gamble
6. Academic research also shows that companies with
growth track records rely heavily on innovation
“Growth outliers do a tremendous amount of
experimentation and innovation. They develop
and deploy new technologies, move into new
markets, explore new business models and even
open up new industries. They take on acquisitions
and aggressively seek input from people and
organisations quite unlike their own.”
Rita Gunther McGrath
“How the Growth Outliers Do It”, Harvard Business Review
7. Most banks say they are becoming more innovative and
investing more in innovation
Innovation Level
More
Innovative
Less
Innovative
+76%
Investment
Investing
More
Investing
Less
+70%
-6%
Source: Efma/Infosys Innovation Survey 2013
-5%
8. Banks are also now more likely to have an innovation
strategy than before
Percentage of Banks With an Innovation Strategy
37%
2009
Source: Efma/Infosys Innovation Survey 2013
50%
2011
60%
2013
9. Most banks think that their innovation performance is
improving
Percentage of Banks with Improving or Declining Innovation
Improving Performance
17%
No Change
Declining Performance
7%
76%
Source: Efma/Infosys Innovation Survey 2013
10. The continuing threat of disruptive innovation may be a
factor which is encouraging banks to be more innovative
11. Agenda
• Innovation strategy and performance
• Overcoming barriers to innovation
• Digital channel innovations
• Innovation case studies
12. IT systems are perceived to be the most significant
innovation barrier for banks, followed by culture
Large Banks
Medium Banks
Small Banks
1
IT systems
IT systems
IT systems
2
Culture
Culture
Regulation
3
Organisation silos
Organisation silos
Financial
4
Regulation
Regulation
Culture
5
Management priorities
Management priorities
Management priorities
6
Financial
Financial
Organisation silos
Source: Efma/Infosys Innovation Survey 2013
13. The problem with silo-based IT systems is mainly that
they increase time to market and the cost of innovation
Very Low
Impact
Average
Impact
Very High
Impact
Scale 1-7
Time to market
5.2
Cost of innovation
4.9
Innovation in products
4.6
Innovation in service
4.5
Innovation in process
4.4
Source: Efma/Infosys Innovation Survey 2013
14. The time to market for new offers is particularly high for
large banks
Time to Market for New Offers in Months
12
6
Small
Banks
Source: Efma/Infosys Innovation Survey 2013
8
Medium
Banks
Large
Banks
15. There are two specific IT-related factors which could
improve innovation execution
Enterprise-wide
banking systems*
Yes
No
Don't Know
Componentised deployment of
banking systems*
Yes
No
Don't Know
* Question: Would enterprise-wide banking systems or componentised deployment improve innovation execution
Source: Efma/Infosys Innovation Survey 2013
16. There are several specific capabilities which would help
banks improve their overall innovation capability
Product
• Personalisation of product offers
• Ability to launch in collaboration
Channel
• Unified experience across channels
• Multichannel integration
Customer
• Customer insight
• Single customer view
Source: Efma/Infosys Innovation Survey 2013
17. Open innovation is being increasingly used although
there are very mixed views on its effectiveness
Very Low
Effectiveness
Average
Effectiveness
Very High
Effectiveness
Scale 1-7
Partnering with IT companies
or other suppliers
4.2
Online idea generation portals
3.8
Competitions for non-staff
3.1
Investment in start-ups
3.1
Relationships with academic
institutions
3.1
Source: Efma/Infosys Innovation Survey 2013
18. Investing in start-ups through a structured corporate
venturing approach can be of value if done well
•
$100m fund targeting start-ups
with the potential to transform
financial services.
•
Based in Silicon Valley, early
investments included SaveUp and
Ribbit Capital.
“Investing in start-up companies committed to new business models enables BBVA
to learn and anticipate the emerging challenges facing the financial services sector.”
Jay Reinemann, BBVA Ventures
19. Agenda
• Innovation strategy and performance
• Overcoming barriers to innovation
• Digital channel innovations
• Innovation case studies
20. Out of 10 digital innovations surveyed, large banks had
on average deployed the most
Source: Efma/Infosys Innovation Survey 2013
Large
Banks
Mobile location-based
offers
Voice recognition for
mobile
6.
Direct only banking
Self-configuration of
products
8.
Medium
Banks
Mobile wallet
Video conferencing
9.
Small
Banks
Mobile NFC payments
7.
1.7/10
2.
5.
1.2/10
Mobile P2P payments
4.
2.8/10
1.
3.
Number of Digital Innovations Deployed
Gamification
10. Transactions via social
media
21. Out of 10 digital innovations surveyed, large banks had
on average deployed the most
Number of Digital Innovations Deployed (out of 10)
2.8
1.2
Small
Banks
Source: Efma/Infosys Innovation Survey 2013
1.7
Medium
Banks
Large
Banks
22. Digital only banking…
Plans for Digital Only Banking
% of banks at different stages of deployment
56%
23%
21%
Currently
Deployed
Planned
No Plans
Source: Efma/Infosys Innovation Survey 2013
“Hello bank! is fully geared to the new
social habits that are now transforming
people’s relationships with their bank.”
23. Mobile wallets…
Plans for Mobile Wallets
% of banks at different stages of deployment
56%
23%
21%
Currently
Deployed
Planned
No Plans
Source: Efma/Infosys Innovation Survey 2013
“CaixaBank, Santander and
Telefónica to create first joint
venture between banks and
telecom operators in Europe to
develop new digital businesses.”
“Berg Insight expects that 2016–
17 will be the first years in which
mobile wallets approach mass
market penetration and more than
10m new wallet users will then be
added annually in Europe.”
24. Location based marketing…
Plans for Location Based Marketing
% of banks at different stages of deployment
51%
31%
18%
Currently
Deployed
Planned
No Plans
Source: Efma/Infosys Innovation Survey 2013
“Barclaycard’s bespoke offers is the savvy
shoppers ‘savings SatNav’, always at your
fingertips offering whatever you want,
whenever you want it.”
25. Gamification…
Plans for Gamification
% of banks at different stages of deployment
56%
35%
9%
Currently
Deployed
Planned
No Plans
Source: Efma/Infosys Innovation Survey 2013
“It is a good application to change our
way of communicating with our
customers, which is now more
approachable and friendlier.”
26. Agenda
• Innovation strategy and performance
• Overcoming barriers to innovation
• Digital channel innovations
• Innovation case studies
27. Some of the speakers at the Efma Banking on
Innovation conference described useful case examples
FNB (South Africa)
• Long term commitment, driven by CEO,
focused on an employee competition
TEB (Turkey)
• Entrepreneurial culture, using multiple
innovation activities and open innovation
UniCredit (Italy)
• How to co-ordinate across a multi-country,
matrix organisation, and invest in R&D
29. Conclusions…
• The innovation “good news” is that performance is improving,
investment is increasing and more banks have a strategy.
• The key challenges when trying to improve innovation
performance are typically to do with IT systems and culture.
• Some banks are able to work around their IT systems issues
but ultimately simplification and working across silos is key.
• Other banks have successfully addressed the innovation culture
issues and are also actively using open innovation techniques.
30. Discussion session
Elisabet Brodin
Head of Strategy
Retail
SEB
Sweden
Rajashekara V. Maiya
Associate VP and Head
Finacle Product Strategy
Infosys
India
What are the innovation investments that will achieve
short term benefits and which ones are important in the
long term?
•
Dorel Blitz
Innovation Manager,
Strategy & International
Operations Division
Bank Leumi
Israel
•
Increasing business process speed, agility and efficiency
has been rated as having the highest impact on a bank's
innovation capability.
What can banks do to increase their agility and efficiency
to be able to innovate better?
•
The research has found that current legacy IT systems
are one of the top three barriers to innovation.
How should banks overcome this as a barrier?