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Its Banking Next

For several weeks now, I’ve watched in amazement as the Bombay Stock Exchange’s benchmark index traded at barely 10% off its highs of January 2008. While India may be an outperformer, that still does not take away from the fact that worldwide, economic recovery has come at a pace few anticipated. Does this mean that we have gone back to where we were before the crisis broke? Far from it. Much has changed in the intervening months to leave a permanent impression on the future of nations, organisations and individuals. Which brings me to ‘Banking Next?’

At Infosys we’ve identified 7 themes which we believe will encapsulate the future of tomorrow’s enterprises, banks being no exception. Let me run you through them.

The digital consumer: Loves technology, is demanding, values independence, and has a mind of her own. Rather than sitting around and waiting, the digital consumer makes things happen by engaging intensively with products, companies, peers and communities online. She is no longer content to consume passively, and seeks to influence product development and innovation through direct and constant feedback. If banks are to grab her attention and clientele, they must gear their offerings around her need for self-service, personalisation and co-creation.

Emerging economies: Asia, the centre of the world? Maybe. But what’s beyond doubt is that emerging economies is where the growth momentum is, and will be for some time to come. Banks have seen evidence of this in the phenomenal spread of mobile banking in regions like Kenya and the Far East. Market potential apart, emerging economies are also gaining strategic importance as innovation hubs capable of leading developments that can be subsequently transported to advanced countries. They’re also the obvious destination for smart-sourcing.

Sustainability: At Finacle Conclave this year, bankers spoke of how they’ve made a thriving business out of sustainability. That’s a key message to the rest of the industry because today, green banking is not only not optional, it is inescapable. We have an implied social contract to make up for the excesses of the past and reduce our non-renewable resource intensity. What can banks bring to the cause? Green innovation, support to sustainable businesses, higher carbon offset and above all, a commitment to conservation which goes beyond the statutes of Corporate Social Responsibility.

New commerce: Linked to the birth of the digital consumer is the rise of a new type of commerce, defined by three words – mobile, micro and inclusive. Customers are on the move, but want uninterrupted access to products and services everywhere. Still smarting from the effects of the financial crisis, they’re in conservation mode, willing to pay only for that which they will consume – they’re asking why,  when they can download a single song or news report, they can’t consume banking in micro quantities?  These two trends have spurred demand even among rural and low income segments which were hitherto excluded. Banks, which until now have only responded partially to these demands, will have to factor them strongly in their future strategy.

Smarter organisations: Can growth cut growth? When a bank becomes a behemoth, it also turns into a vortex of complexity. The twist in the tale is that research shows that complex organisations grow much slower than simple ones. How can banks become smarter to combine sophistication with simplicity? Is there a way to shorten their learning curve?  Can they adapt faster to the ever-changing environment? We think technology is the key to creating smarter organisations of the future.

Pervasive computing: It’s everywhere - around us, among us, within us. Today there are 2 billion people and organisations on the Internet, that number will explode to 60 billion within a decade! Thanks to web 2.0 and cloud computing, more information is available outside organisations than within. Banks, like other enterprises, are losing control over public opinion, which is increasingly being shaped in online networking forums. Rather than deny the relevance of social media, they must harness its wealth of information to gather insight into their stakeholders’ expectations. Intelligent banking enterprises will learn to leverage sensor networks to pick up localised data and use it to deliver better products and services.

Healthcare economy: With the burden of healthcare spending looming large over aging developed nations, their enterprises will have to factor how to mitigate its impact – for instance by encouraging healthy lifestyles among employees. Financial institutions may have to realign their thinking to health-related needs, and find ways to make medical insurance and retirement products more affordable. As large employers, they can make a big impact on prevention just by promoting good health practices within their organisations.

We, who have an interest in the financial services space, must prepare to take on a very different world where customers will determine how banks must be run, where the global pecking order will make room at the top for emerging market institutions and where sustainability equals survival. There are several questions before us. How can we use technology to serve the needs of banking next – should we mobilise our offerings or focus on outreach? Is it time to put our tech resources on a cloud? At a time when competition is at its peak, is it wise to collaborate with rivals? Any answers out there...?

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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