Sarah Kocianski is a fintech and insurtech strategist as well as the leader of the Qorus Open Finance community. She shares an overview of the results of this year’s research and reveals what she believes are the key findings of the new edition of the Innovation in Retail Banking 2023 report.
As we go through a period of widespread economic change that’s already resulted in many financial services companies cutting expenditure across the board, it’s important to remember that innovation is key to banks surviving, and thriving, in less favorable conditions.
Research conducted for this year’s Innovation in Retail Banking report suggests banks are coming to realize that, with findings including the increasing conviction that investing in innovation is a driver of future revenue, as opposed to the long-held belief it’s a luxury cost. That change of perspective is likely partly due to banks seeing increased success in their innovation efforts, another finding from our research.
The rolling out of digital customer touchpoints is one such area where success has been marked. Sped up by widespread lockdowns during the pandemic, fully digital account opening is now common, as is the provision of omnichannel customer journeys.
There are other reasons to be optimistic that institutions’ attitudes towards transformation are changing for the better – they are more willing to work with third parties, an approach which can speed up time to market for new products and services. Banks are also embracing the idea of more focused business models, and the consequent need for a more sophisticated, and open, approach to data.
That said, there are still some areas which need work, and now more than ever is the time to address them. Structural challenges continue to hinder banks’ innovation efforts and wider attempts at digital transformation, in particular legacy systems, outdated processes and archaic cultures. These issues result in inability to be agile, to move quickly and to understand and meet customers’ shifting and increasingly urgent needs – all of which are vital for institutions trying to navigate ongoing economic turmoil.
On a more granular level, banks are struggling with holistic digital engagement that provides personalized experiences. In part that’s due to an ongoing failure to take a customer-centric (as opposed to product or technology-centric) approach to innovation. The lack of historic investment in data collection, cleaning and analysis is also an issue for banks trying to create tailored products and services.
Holistic digital transformation is incredibly difficult, but there are examples of how it can be done, and lessons that can be learned from where it hasn’t been so successful. This report doesn’t shy away from the challenges, but instead identifies them and provides insight into how they can be solved, as well as evidence of where innovation initiatives have had positive results. The aim is to provide inspiration for the year ahead and enable as many institutions to achieve as much success as possible, despite difficult circumstances.
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