Three quarters of banks are expecting to invest in innovation, according a report from outsourcing firm Infosys, though many continue to cite legacy IT systems as a barrier.
The fifth annual ‘Retail Banking’ report, conducted by Efma, surveyed 148 banks in 66 countries. The study revealed that the 77 percent of banks are intending to increase their investment in innovation, giving an indication that more financial institutions are willing to invest following the financial crisis. By comparison, the 2009 report showed that only 13 percent of those surveyed had increased investment in innovation.
The report noted that innovation performance at European banks is "improving", but is still lagging behind that of other regions.
Banks are investing heavilly in mobile and online. Mobile person to person payments systems, such as Barclays Pingit in the UK, have been enabled by 29 percent of banks, while 23 percent of those surveyed have rolled-out near field communication (NFC) payments.
Plans to use location data from customers’ mobile devices has enabled location-based offers to be deployed by 29 percent of banks, while 51 percent are planning to do so. Gamification has been used by nine percent of banks, with 45 percent aiming to gaming elements to engage customers in future.
However, legacy systems and siloed IT continue to present a barrier to realise the full benefits of innovation strategies.
Across small, medium and large banks, legacy IT systems were seen to be the number one barrier to innovation, ahead of other factors including internal staff culture and regulation. Innovation was particularly difficult for those going through changes to their legacy infrastructure, or attempting to merge systems, the report highlighted.
Siloed IT systems were also a problem, particularly for large banks, which claimed that siloes had a significant impact on the time it took to bring new products to market. The average time to market for large banks was around 12 months, compared to six months for smaller players.
“The past five years have seen banks move away from caution and austerity, towards optimism and proactivity,” said M. Haragopal, global head of Finacle at Infosys.
“This year’s Infosys and Efma report reveals that driving innovation is taking a centre stage at banks, with many focusing on increasing business process speed, agility and efficiency.
“The report also shows that retail banks across the world have recognised that simplification and innovation can go hand-in-hand to help grow business and deliver excellent customer service.”
According to a report from analysts Ovum earlier this year, retail banks across the world are set to invest a total of $118.6 billion (£75.3 billion) in IT systems during 2013, up 3.4 percent from 2012