Technology investments in the banking sector will revolve around ‘topical’ areas such as information security, advanced analytics and open banking APIs, as opposed to ‘future-looking’ areas such as conversational AI, robotic process automation, the Internet of Things, augmented reality or virtual reality. However, 70% of organizations planned to support a conversational AI solution, with close to 25% having made investments in AI, according to Infosys Finacle, part of EdgeVerve Systems, a product subsidiary of Infosys, and Efma that launched the ninth annual study of Innovation in Retail Banking.
The study reveals digitizing products and services, customer journey and security as top focus areas for Innovation and transformation. According to the report, retail banks continue their thrust on innovation in all functional areas, with customer experience and channels (both at 78%) being at the forefront. Other segments that have witnessed higher spends in innovation include products (67%), process improvement (64%) and marketing (57%).
The research, in which over 300 bankers globally participated, found that retail banks consider large technology companies, challenger banks, and smaller fintech start-ups as threats to their growth. Similar to 2016, the greatest impact of transformation is expected to be in the areas of payments and mobile wallets.
The study however points out that the top three innovation challenges include systems integration, legacy technology, and the time and cost required to move from concept to reality. Likewise, small and mid-size banks are falling behind in virtually all levels of innovation, reflecting an inability to invest, the impact of competing priorities, the need to focus on cutting costs and respond to compliance requirements. More than 50% of respondents expect to see a measurable ROI from their investment in innovation in 1-3 years; more than 30% expect to see results in less than a year, the study said, even though only 10% of respondents have a robotic process automation solution.
The study finds a vast distribution on the level of maturity within organizations leveraging data-driven insights.
