Banks in emerging middle income and relatively high growth countries such as Brazil, India, Malaysia, Russia, South Africa and Turkey are more likely on average to have an innovation strategy, to be aiming to become innovation leaders, and to be investing in R&D, according to a study commissioned by Infosys and conducted by EFMA.
The annual study, which surveyed over 100 retail banks around the world, found that banks are most concerned by the threat from technology companies like Google, Apple and Facebook entering the market. The threat from this type of competitor was rated high by 45% of banks and has increased in the last 12 months.
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After technology companies, the most significant threat is perceived to come from telcos and from start-ups.
Nearly 26% of banks which participated in the survey said they are investing in start-ups as part of their innovation strategies. While, 84% of the banks said they are increasing investment in innovation as compared to 2009, when only 13% of banks increased investment, according to the survey report.
Nearly 61% of the banks indicated that they have an innovation strategy in place, a significant increase from 37% in 2009.
The report says that many banks organize their innovation activities around specific themes.
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By GlobalDataMobility was found currently to be the most important theme as 88% of the banks rated its importance as ‘high’. The themes of Big Data (67%) and Social Channels (63%) closely followed Mobility.
Over 70% of banks said they perceive mobile payments and services on multiple devices to be of high importance for delivering customer value in the mobile channel.
For the online channel, automated account origination and personalization of marketing offers were considered to be of high importance by 70% and 59% of the banks respectively.
Michael Reh, senior vice president and global head of Finacle at Infosys, said: "One interesting finding of this year’s report is that many banks in rapidly growing emerging markets, who are used to generating profits from customers with smaller transaction values, are at the forefront of innovation in retail banking.
"Lessons on innovation from these banks could be extremely valuable to financial institutions around the world as they compete with new players in the market."
