Finacle Whiteboard

The financial environment in the UK is in a state of unrest - banks’ offerings are being revamped, regulations are changing fast, newer business models are coming to the fore, more players are entering the fray, technologies deployed are transforming progressively and the modus operandi at banks is altering rapidly. The result? Changing customer expectations and a climate that lacks sureness. So, where do the answers lie? Banks are as yet exploring.

New disruptive models for deposit taking – direct banking, multi-channel offerings, self-service automation – is one business trend that dominates. ICICI UK has being able to give one of the highest card rates in UK for deposits through its deposits offering - HiSave. UK-based service provider, Monilink, provides mobile banking and payment services to its end customers and new banking entrants, like retail giant TESCO, have personal finance divisions which provide financial services to customers. A recent agreement with 2 major banks, which entails these banks to sell off a segment of their branch network to finance injection of funds, partly, is further opening up forums that till now had been dominated by a few big banks only. The population diversity in the UK can throw up some interesting possibilities. New breeds of products like Islamic products would possibly start taking some shelf space at banks as we go forward.

There also seems to be a move towards consolidation as the new economic regime unfolds. This would ultimately provide stimulus for banking platform upgrade and replacement.

As economies the world over start cranking up and newer players make inroads into the market, the scenario is sure to become more aggressive, and indeed there would be a stronger case for new generation banking.

Good reason for cautious excitement, I think!

Posted by Chandramouli Kundagrami at 11:41 AM | Permalink | Comments (0) | TrackBacks (0)

Banks have invested tirelessly in channel and process transformation to improve end-user experience. But you'll agree, only certain innovations, primarily on the channel front, have created visible impact on customers. Which leads me to ask whether there's a way by which banking innovation can be more in-the-face? How about innovating with customer interactions?

Innovation has already made its way into customer relationships to a certain extent with most banks personalizing product offerings and services at the segment-level. Now, banks are trying to tailor each interaction to their customers' immediate context - so, if someone just booked a holiday package online, it's time to swoop in with a bundled travellers' cheque and insurance offer. In fact, some banks even send out summarized travel insurance contracts via SMS to interested customers!
A large Spanish bank has employed the video call - wherein customers can video chat with designated account managers at any time of day or night - to great effect, improving both customer satisfaction and cross-sales in one grand stroke.

It's also possible to innovate on group relationships. An insurance major in the U.S. has made inroads into affinity groups such as credit unions and alumni associations by offering customized packages to members. Another U.S. direct insurance firm allows customers to build their own car insurance policies online, based on what they can afford.

And take the case of this bank in France, which asks its customers to personalize the banking relationship by specifying whether they prefer to use an advisor or act independently, bank at the branch or online and so on. Customers can also choose between packaged and à la carte banking, to boot!

But perhaps no other innovation connects with customers as strongly as this proposition from a U.K bank - they pay people £ 100 to switch to them and should the relationship not work out within 6 months, help the customers move to another bank after paying them twice that amount!
The era of channels is only going to get more interesting in the days to come. Surely, we'll each have something as innovative...as confident...as bold as that to counter. 

Posted by Navin Rammohan at 08:25 AM | Permalink | Comments (0) | TrackBacks (0)

Branch: The Twists in the Story Continue…

Undoubtedly new channels have revolutionized the way people bank. And yet, branch networks thrive. A reality reflected in the discussion topic at a recent conference on multi-channel distribution that I attended.

Increasingly, it seems, flexibility is the key to the future of branch banking. And most banks that share this belief are willing to put their money where their mouth is. Take the U.K. banking sector for instance, which has seen a number of branches shut down. A big part of their preparation for a more online future is to find ways to compensate for the inevitable reduction in revenue. For who doesn’t know that more online means more free? In contrast, Icelandic and Austrian banks believe that the branch, still the primary relationship building channel, needs more touch than tech. They’re on the hunt for a better branch model.

It’s amazing that banks have taken a leaf out of the hotel industry book! While certain glitzy branches have stretched customer service to the point of providing gaming areas for kids, others have gone the budget route, placing small outlets with a staff of about 5, in high traffic areas. And who could have dreamt that modular branches would be repeatedly erected and dismantled to provide banking services a few hours every week in rural areas?

But branches are experimenting with more than size, location and timing. Some have innovative layouts that allow customers and staff to view the same screen, bringing transparency to the interaction. Others enrich customers’ lives beyond banking by inviting them to select events such as book readings and exhibitions, conducted within the premises off-hours.

Banks are also making branch operations more flexible with an eye on improving accessibility. An Italian bank has given a whole new definition to mobile banking – theirs is delivered via trucks completely kitted out with branch infrastructure, which move from place to place, promoting the bank’s services as well as assessing opportunities. And here’s one format that shopaholics must beware of – the branch that is located in busy markets and works the same timings as the shops around it. Their motto: catch the customer in a happy mood!

There must be many more interesting permutations out there…to inspire…to emulate…any branch stories to tell?

Posted by Navin Rammohan at 08:58 AM | Permalink | Comments (1) | TrackBacks (0)

O yeah! Who hasn’t heard of it…the competition that’s getting tougher, margins being squeezed, new entrants…new business models…regulatory requirements growing by the week...and FINALLY banks thinking up of ‘innovation strategies’  to beat it all... wham!

Of course, I’m sure it’s not that simple. After all, at banks innovation is not only defined by a new software or a new product but by the way processes are redefined in terms of value add, cost savings and a constant structured organizational growth. In such a scenario managing and measuring innovation becomes critical.

After identifying the drivers of innovation –  implementation of new ideas, explicit focus on customers, establishing a customer insight team and using this insight systematically to develop new offerings and building tools to find solutions to customer problems – many banks have benchmarked their performance against other sectors, formally exchanging learning within competitive market. Such examples extol the virtues of ‘importing innovative thinking’ by using external consultants.

That’s just the beginning. By investing in leading edge technology banks have been able to configure products and services around emerging needs. They have access to a full range of insight techniques, including quantitative and data-orientated methodology and qualitative approaches. A case in point are the U.S. banks offering money transfer services to the large unbanked Hispanic segment through non-banking channels, counting on this leading to a formal relationship in future.

To me the future certainly seems to belong to the innovative service provider. Think of peer to peer ‘social lending’, global money transfer service using SMS text messaging and contactless stored value smart cards…and you’ll possibly begin to think my way. And ask “Is my bank down with it, yet?” !!

Posted by Bhaskar Banerjee at 02:55 AM | Permalink | Comments (0) | TrackBacks (0)

The strategic importance of banking innovation as a mantra for all-weather survival, today, comes from its potential to lead banks away from a crisis-torn past to a better, albeit, changed future.

A fact clearly ratified, recently, by findings of an independent study of more than 80 retail banks in Europe undertaken jointly by Infosys and European Financial Management Association (EFMA) which clearly brought out the importance of innovation. The banks, spread over Central & Eastern Europe, Russia &CIS and Western Europe, recognise the role of innovation as a driver of future growth and efficiency and nearly 3 out of 4 nurse aspirations of emerging as innovation leaders within their own markets.

That said, they’re only at the beginning of the journey – only 37% of respondents are ready with their innovation strategy, and the perceived importance of innovation to improving efficiency and customer relationships is yet to be matched by commensurate efforts.

Still, I believe this study holds much insight for banks as it throws light on issues such as the relative merits of strategic and incremental innovation and barriers to each, besides describing the experience of successful innovators. Interestingly, Information Technology, which is perceived as a key enabler of innovation, is also cited as one of the biggest barriers by those banks that are running on legacy systems. They can draw inspiration from the experience of banks in Central & Eastern Europe, especially Turkey, that are modernising their systems to power their growth innovation agendas. On the flip side, lack of ideas is perceived as the lowest barrier and most banks encourage generation of new ideas by employees.

In my view, that’s as good a place to start as any!

Read the Infosys and EFMA Innovation Report here.

Posted by Sanat Rao at 11:11 AM | Permalink | Comments (0) | TrackBacks (0)