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Innovation in Financial Services

Innovation in Financial Services

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

Ten trends that are shaping the banking industry

27 September 2010  |  13644 views  |  3

I work with a great bunch of folks here at SunGard, every Monday morning, without fail, we congregate around the coffee machine and catch-up on our weekend activities.

Today, for once in my life! I had little to say having spent my Sunday afternoon watching my eldest son’s football team put in a great performance yet still losing eight nil.

The discussion quickly turned back to work and the news reported by the Confederation of British Industry (CBI) that the UK Financial Services Sector grew in the last three months at the fastest rate since June 2007.

We then started discussing the trends that are shaping the banking and financial services industry.  The ten that we feel characterized what we have been seeing in the industry are:

1.    The financial crisis has caused banks to re-assess their business fundamentals like profitability and client relationship management to improve client retention and cross selling capabilities

2.    Banks are renewing their focus on the fundamental assets of customer, staff and capital rather than product innovation for long-term growth to become well managed

3.    Banks are increasing risk transparency to help reduce operational risk and comply with corporate governance regulations and standards

4.    Banks are focusing on staff efficiency to make them more aligned with the bank’s risk and profit strategy by enhancing their IT solutions

5.    Banks are moving from a product-centric approach to a client-centric approach with a 360-degree understanding of their clients to better manage and maintain client relationships

6.    Banks are deploying client profitability analytics to enhance performance by analyzing profitability at multiple levels

7.    Banks are seeking data reporting technology and proactive approaches to better manage clients and client portfolios

8.    Banks are trying to better leverage the best of existing infrastructures while adding new platforms for operational and cost efficiencies

9.    Banks are accelerating the use of algorithmic approaches to complex back-office tasks for increased automation and efficiency

10.  Banks are looking to do more with less by balancing cost reduction with process improvements using business process management and business activity monitoring

Would you agree? Did we miss anything?

TagsPost-trade & opsSibos

Comments: (4)

A Finextra member
A Finextra member 28 September, 2010, 08:32

I agree fully with the above mentioned trends, however would like to add one. Trend 11) Products are becoming a commodity and differentiation has to take place on another level. Business Banking Board believes that this "level" is Information based value adding services. I would like to hear what other people think? 

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 28 September, 2010, 10:47

I fully agree with Madelie. Like we do for high-tech companies with our proprietary STRADOF model, it's probably time for Financial Services Companies to also look beyond the product to find differentiators, of which there are plenty in what we call the "Total Ownership Experience".

With my current ongoing struggle with two Top 5 UK banks to remit money from UK to India, I can readily propose "Concierge Remittance" as one such differentiated offering.

An in-person consultative service by knowledgeable staff at the branch premise will help demystify BIC, IBAN, transfer currency, and other complications involved in a typical high-stake remittance transaction.

In a previous experience a few years ago, it was very off-putting for me to reach the branch of a Top 5 UK bank to do a remittance transaction  in person, only to be directed toward a telephone, and then having to speak out a 30-character IBAN number, beneficiary name, and other details loudly enough so that I could be heard over the din of the surrounding lunch hour Canary Wharf crowd. What was worse, the telephone transfer didn't come free-of-cost. Even if people had to pay double that fee, I'm sure many of them would prefer face-to-face service for such transactions.


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Brett King
Brett King - Moven - New York 04 October, 2010, 10:11

I think also that multi-channel support is a massive issue and trend shaping retail banking in particular. Solving the issue means that not only do banks need to become client-centric, but channel agnostic. This requires a fundamental adjustment to metrics, strategy, organization structure and such. Probably, beyond re-assessing the fundamentals, this is probably the most accute challenge banks will have to tackle in the next 5-10 years.

The branch-centric approach to the retail organization structure is problematic when 90% of your customer interactions are non-branch.

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Nikhil Mittal
Nikhil Mittal - Wells Fargo - Charlotte 07 October, 2010, 07:24

In agreement to what has been briefed by Colin, I would also add a perspective on New Age banking in emerging markets like India. Banks while are still runing on high operational costs, the most trusted banks or the REAL mass market banks have the least IT penetration but perhaps higher CSAT and hence preference among individuals.

Most of the less operational cost - driven banks and financial institutions are least 'connected' with an individual.

So while we're looking at all the above mentioned points, we're blatantly ignoring the realities.

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