A new research paper, which reviewed a decade of banking innovation reports, has concluded that delivery channels will become the next focus of attention, with most banks saying that mobile and online will be their primary distribution channels in four years’ time.
The research, in which over 300 banks globally participated, was backed by Efma and Infosys Finacle.
A key finding was that open banking APIs were viewed as the top technology behind the next phase of banking innovation, more so than any of the 'emerging' artificial intelligence applications such as machine learning and chatbots.
Looking at the worldwide numbers, 65 per cent of the senior bankers interviewed nominated open banking as the most important issue; it was ranked number one by as many as 78 per cent of respondents from among the Australian bankers, according to a spokesperson from Infosys, one of the report's backers.
Another of the top-level findings was the sudden change in attitude banks are taking towards returns from their investment in innovation, compared to last year’s report.
In 2017, 31 per cent of firms had an innovation ROI perspective of one year, compared to only 17 per cent this year. In addition, 63 per cent looked for an ROI in one to three years as opposed to 54 per cent in 2017.
Only 6 per cent of respondents – about 18 people – came from Australia and New Zealand. After pointing out that this was a small sample size, Rajashekara Maiya, global head of business consulting and strategy for Infosys Finacle, based in Bangalore, India, outlined to Banking Day the regional differences he was able to glean.
He said one area where the researchers found a notable area of difference was in the approaches to innovation disclosed by the Australian respondents, and the extent to which respondents said they would be relying on fintech partners to drive innovation.
In line with their global peers, Maiya said, respondents from the Australian banks also nominated open banking APIs as among the most important innovation drivers causing change in the next 12 months.
When it came to nominating the business lines to be most affected by innovation, Australian bankers gave payments a much higher priority than their peers in the Americas or Africa in particular, who were more keen on innovation efforts around product delivery channels, followed by new products.
The last two years have also seen the emergence of instant account opening and instant consumer loan approval, and no doubt very soon we will see instant mortgages.
Instant payments are coming to revolutionize all facets of the payment chain and serve as the catalyst for a new wave of innovative banking services.
Looking further out, to 2022, 70 per cent of all respondents expected AI to have "a significant impact" in transforming customer service and support.
Conversely, legacy technology was identified as one of the top three barriers to innovation, leading 74 per cent of banks to admit they are increasing investments in technology modernisation.