Innovation needed in digital banking ...

A Finextra member 20 January, 2012, 16:29 0 likes

James, good post and summary of the challenges suggested by the report. Banks will need to evolve from sustaining innovations to truly disruptive innovation or they will relinquish hard-won customer relationships to more agile and inventive entrants. The reality is that retail banking will need to be re-imagined to meet the needs of constantly connected, canny and empowered customers. This involves a wrenching change in innovation mindset. As you say mobile offers huge potential but it remains to be seen which banks will be bold enough to take the opportunities.

Marty

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 23 January, 2012, 11:40 0 likes

The real challenge is for banks to be able to think of adequate number of use cases for deploying various existing technologies. For example, it is technically feasible to make a geofenced offer for a checking account on the smartphone of a potential customer walking past the bank branch. But such an offer has limited scale since checking accounts - unlike books, DVDs or sandwiches - are not bought and sold everyday.

On the other hand, stock trading is a great usage scenario for mobile phones and several banks already offer this product.

Mobile payments could be another strong use case for mobile but banks might be thinking that they're doing the smart thing by ceding the m-wallet market to third-party providers. It's quite likely that a typical customer might prefer to store details of their cards issued by Bank X, Bank Y and Bank Z in Google Wallet, ISIS or some other independent m-wallet provider than in the one provided by their bank (if any). As long as the payment eventually happens on the card network rails - as it does with almost all m-wallets today - banks X, Y and Z earn no less interchange revenue than if they'd incurred the cost of providing the m-wallet. While it's difficult to predict the long-term repercussion of their approach, banks' reluctance to jump into m-wallets or mobile payments seems justified from the perspective of topline and bottomline in the short term.