Changing industry dynamics through innovation
Over the past five years, the BAI-Infosys Finacle Global Banking Innovation Awards have showcased innovation and emphasized the importance of changing how we provide value to customers in the financial services industry. Looking back at hundreds of past nominees and the exclusive group of selected winners in various categories, it is clear that there is a commitment to innovation in this industry. Even more impressive is observing the impact of innovation on results and success in competitive positioning for many organizations.
Financial innovation can take a variety of forms and it influences how consumers and businesses interact with their banks and their money, generally promoting greater convenience, flexibility and security. Sometimes, innovation is an outcome of advancing technology and changing consumer preferences. For example, small- and medium-sized enterprises (SME) lending has addressed a gap that opened after the financial crisis. In other cases, new platforms such as mobile banking and crypto-currency improve consumer and business banking experiences in a variety of ways.
As part of our Global Banking Innovation Awards, we have recognized a unique collection of financial services companies from around the globe. These companies are at the forefront of the industry, having successfully developed new and different approaches that improve profitability, efficiency and, most importantly, customer experience in the markets they serve. There is no question that innovation is alive and well in this industry and it’s happening in surprising ways and places. The following are three key trends we observed in this year’s competition:
Processes and technologies to enable the omnichannel experience. Financial services companies are rationalizing and consolidating disparate channels that possess unique and inconsistent interfaces that can be confusing to customers and are costly to maintain. Functions are being streamlined in order to provide consistent customer support across various platforms. Unifying the customer experience across all direct banking channels has provided these institutions with a competitive advantage through differentiated products and services offered to their customers, as well as increased efficiency and improved satisfaction of the employees who serve customers across these channels. One bank, for example, introduced a new mobile banking application for all its operating systems (Apple, Android and Windows) as well as unifying the customer experience across all direct banking channels for both customers and non-customers. Another accomplished a sales channel integration that enables the entire organization to become more customer-driven.
Customized banking through Application Programing Interfaces (APIs). Banks are turning to APIs for customizable product offerings for targeted segments, enabling them to provide their customers with a more personalized banking experience. While the API marketplaces and app stores are emerging across the global banking ecosystem, there are four types of stores most influencing the market: 1) public app stores that are used by banks and nonbanks to deploy mobile apps built for banking customers; 2) vendor app stores that are either cloud-based or bricks-and-mortar; 3) enterprise app stores for employees offering personal banking, business services, and third-party consumer apps; and 4) banking app stores for customers.
Integration with revolutionary technology. Some financial services companies focus on incremental innovation, including small, gradual improvements to existing products. The major advantage of this approach is the immediacy of the changes, which presents lower execution risk and usually protects customer loyalty and brand position. However, in an increasingly competitive marketplace with changing customer preferences, more aggressive innovators are placing bigger bets on innovative approaches that capitalize on today’s changing environment.
The evolution of the Internet of Things (IoT) and the development of other new capabilities have presented many opportunities for financial services companies to develop services that can improve the global and multichannel experience of customers. For example, banks have started using robots in branches to enhance the customer experience using advanced technology combined with a different kind of personal touch. Robots can serve customers using state-of-the-art multi-lingual speech and voice/face recognition technologies, accumulate customer interaction data to analyze and discover customer needs and improve branch security by monitoring customers with facial recognition and behavioral analytics. Customer response has been positive, with some segments even preferring this delivery over other traditional approaches.
Another interesting area of innovation has capitalized on the capabilities of connected cars, where financial services companies and automotive companies have partnered to create banking applications that are integrated into a vehicle. One bank introduced an application that directly connects the customer to a selected branch and provides an ATM location finder feature in the automobile.
Financial services leaders who strive to create game-changing innovation recognize the challenges and costs of innovation but they pursue new concepts because it strengthens how they can compete effectively in a changing marketplace. The BAI-Infosys Finacle Global Banking Innovation Awards celebrate exceptional accomplishments in innovation by financial services companies that are changing our business. More than 250 nominations from 127 companies representing 34 countries were submitted this year. Winners will be selected by the BAI-Infosys Finacle Innovation Circle Judging Panel and this year’s awards will be presented at the BAI Retail Delivery 2015 Conference, scheduled October 13-15, in Las Vegas.
Ms. Bianucci is president and CEO of BAI and publisher of BAI Banking Strategies and BAI Banking Strategies Daily.