A global not-for profit organisation, Efma has launched the seventh annual study of ‘Innovation in retail banking’ which highlights that 84 per cent of retail banks have increased their investments in disruptive technologies and innovative services to deal with the surge in new industry competitors. This comes at a time when the perceived threat of market disruption in retail banking is mounting.
The report has surveyed over 100 retail banks globally. According to the report, approximately 72 per cent regard threat from technology companies, start-ups, retailers and telecom players as high over very high. The report highlighted that start-ups introducing new technologies and business models that are counter to established retail banking practices present both challenges and opportunities for banks.
Michael Reh, Executive Vice President and CEO (Designate), EdgeVerve says, “Digitalisation continues to massively shake the business foundations of ‘brick and mortar’ banking institutions. Banks need to proactively disrupt themselves and explore working with innovative start-ups to accelerate change and develop a leading edge in a competitive market. To achieve this, a dual strategy will be critical. Banks need new capabilities to help their businesses grow in new ways. They also need to renew their existing systems, opening them up to benefits of mobility, analytics, cloud computing, and connected systems.”
Key highlights of the report
- 69 per cent of banks believe that start-ups will have a high or very high impact on innovation and can help them to develop more innovative solutions
- New business models by start-ups like Peer-to-Peer (P2P) banking, bypassing conventional inter-bank wire transfer mechanisms to lower costs.
- 60 per cent of banks are not upbeat about start-up challengers and partners. Concerns over regulation and security are high, with half of the banks citing these as the primary challenges of working with start-ups
- 68 per cent of banks believe they are becoming more innovative, 84 per cent are increasing their investments in channels and 82 per cent are increasing their spends on improving customer experience
- Most important new technologies (after mobile) for banks are advanced analytics, big data where 57 per cent of banks expect the impact to be high or very high. This is followed by open APIs 53 per cent, and the Internet of Things 47 per cent
59 per cent of banks expect mobile technology to have a high or very high impact on the market