The Evolution of Future Retail Banking Landscape
In a revealing report, Michael Reh, EVP of Infosys and CEO of EdgeVerve, has shared insights from the annual Infosys Finacle and Efma financial services survey. The survey underscores the banking industry's dynamic evolution, with a focus on collaboration, digital transformation, and a customer-centric approach.
The report highlights several key findings:
- Accelerating Disruption: The survey underscores that disruption in banking, driven by technology and changing customer expectations, is accelerating. Traditional banks recognize the need to adapt to stay competitive against new entrants.
- Rise of Fintech Start-Ups: Start-ups, especially fintech firms, are increasingly influential. Banks see these start-ups both as competitors and potential collaborators for innovation.
- Collaborations and Partnerships: Many banks are actively engaging with fintech start-ups through partnerships, acquisitions, or joint ventures to leverage their technology and accelerate transformation.
- Digital Transformation as a Priority: Digital transformation remains a top priority for banks. Investments in cloud computing, AI, data analytics, and automation are seen as crucial enablers for improving customer experience, operational efficiency, and compliance.
- Customer-Centric Innovation: There is a clear focus on using digital technologies to create seamless, personalized, and omnichannel customer experiences. Banks are redesigning processes around customers' evolving preferences.
- Regulatory and Security Challenges: Alongside innovation, banks are increasingly aware of regulatory requirements and cybersecurity risks. Digital initiatives are planned with compliance and data privacy as integral considerations.
- Future Outlook: The survey indicates optimism for continued transformation, with banks expecting ecosystems involving start-ups, technology providers, and traditional players to reshape financial services over the next 3-5 years.
The report also emphasizes the growing competitive threats from outside the industry, such as new banks or non-banks, and start-ups. Location-based offers and improved service delivery are examples of how organizations use consumer data for experience-driven banking.
The changes in the financial services industry will be driven by increasing and evolving consumer demands combined with continued competition from outside the industry and start-up organizations. In common with the 2014 survey, countering competitive threat was considered the industry's biggest challenge, cited by 72% of respondents.
The acceptance of mobile banking has grown rapidly, changing the foundation of banking. Exciting innovations are happening in mobile banking, aiming to simplify and enhance functionality. Banks worldwide are innovating their mobile offerings at various customer touch-points.
Branch personnel will be able to quickly recognize customers, predict the reason for the visit, and perform outstanding service. It's important to digitize employees, not just the branches, for enhanced customer-employee interactions. Retail technology will be brought to bank branches to improve customer service.
The next generations of consumers are fully embedded in mobile, digital, and social media. This year's report focused on disruption and how banks can effectively work with start-ups to boost innovation performance. Bankers are concerned that more empowered and better-informed customers may begin to switch providers.
For the last seven years, Infosys Finacle and Efma have conducted a comprehensive financial services survey. The continued development of digital channels and associated digital services is another significant trend. The survey covers banks' corporate and IT priorities, challenges, and views on the competitive environment.
In 2015, bankers were more concerned with the threat from outside the industry (72%) compared to inside the industry (45%) as per the previous year's survey. Banks worldwide are innovating their mobile offerings at various customer touch-points to provide a more personalized approach to consumers through richer analytics-driven insights.
- In the financial services industry, the collaboration between traditional banks and fintech start-ups is becoming more common, as both parties recognize the potential benefits of digital transformation in business and finance.
- The increasing influence of technology in the banking sector has led to a shift in focus, with banks prioritizing investments in AI, cloud computing, and automation to improve customer experience, operational efficiency, and compliance.
