Disruptive Technologies Shaking Up Banking Sector
The banking industry globally is undergoing a thorough shake-up with innovative technologies, from startup to digitization, finds the eighth annual study ‘Innovation in retail banking’ released by Efma and Infosys Finacle.
The research report ‘Innovation in retail banking’ revealed that almost 73 percent of banks consider working with innovative startups as the best approach to access disruptive technologies. However, 77 percent of banks regard the threat from technology companies, start-ups, retailers and/or telecom players as high or very high. Over half now consider the threat from technology companies and start-up challenger banks as significant.
Despite that, the research, in which 158 banks from 56 countries participated, showed that banks have largely embraced digitization and are aggressively adopting new technologies in order to innovate. The proportion of banks with an innovation strategy has increased to 74 percent in 2016, from only 37 percent in 2009.
Sanat Rao, Global Head of Infosys Finacle, EdgeVerve, said, “Changing customer preferences, rapid evolution of technology and pressures from outside of the traditional banking world are accelerating a major transformation of the banking industry. The confluence of these forces is putting digitization at the center of technology renewal, enabling multi-channel touch-points for superior customer service. From the research findings and customer interactions, it will likely be the development of open API’s, AI and blockchain that shall cause the next big change in banking.”
Vincent Bastid, CEO, Efma said that this year’s global banking study shows that banks have resolutely turned to start-ups to drive their own digital transformations. However, banks are being held back by old legacy systems and are still divided on where and how much to invest. Banks should think globally and embrace new ways of doing business.
Majority (86 percent) of banks believe that emerging competitors will have a significant impact in the payments area. For half of the banks surveyed, legacy technology environments are the biggest barrier to digital transformation, followed by a lack of unified vision (44 percent) and a lack of skills and expertise which is 38 percent.
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