Sometimes symbols speak louder than words. If a few decades ago, banking evoked images of manual ledgers and lumbering branches, today, the visual is one of cloud, internet and mobile. In between, banking has undergone not one, but several technology revolutions marked by the arrival of the mainframe, networking, personal computing and automation. Today it is in the grip of a digital transformation.

Every technology revolution so far has raised the bar on banking operations, making them swifter, more cost-efficient and less error-prone. While digital continues this tradition it is, more importantly, catalysing a transfer of power to the end point, in this case, the consumer of banking services.

To understand how momentous this shift in power base could be, consider the fact that by 2020, there will be an entire generation of banking consumers — wielding incredible influence and purchasing power — who have lived a predominantly digital existence.

Gen C At Infosys, we call them “Generation C”, because they are connected, communicative, content-centric, collaborative, community-oriented, and always clicking. Because the consumer is at the heart of the digital revolution, its effect is amplified, so much so that it is creating disruption and transformation in almost equal measure.

As banks try to navigate these stormy seas, they will need to chart a different course in which they inject efficiencies into their existing lines of business by renewing underlying processes and platforms, even as they adopt new technologies, systems and best practices to discover and resolve the greatest problems of our times as well as innovate new solutions to create new sources of value. These five digital trends will work as the biggest levers of this “renew and new” strategy.

At seven billion connections, just when mobile seemed to have reached its limit of consumer adoption, the goalpost shifted yet again. The next evolutionary stop is “mobile for all” where mobility will be used not just anywhere, anytime, but everywhere and every time in banking to perform and approve transactions, deal with exceptions, power internal processes and deliver all manner of financial services to customers. Our joint research with EFMA (European Financial Management Association) suggests that a large majority of banks will leverage the mobility opportunity, not least of which is a mobile banking user base of one billion and $2 trillion worth mobile payment transactions by 2017, to “renew and new” their way forward.

Finally, the big hype of big data is making way for big value. And banks, not far behind Google which processes more than 10 million terabytes of data daily, seem fully committed to tapping big data in a big way. In our aforementioned research, big data ranked the second most important innovation theme for banks after mobility. Banks are keen to leverage big data in numerous areas, ranging from customer intelligence to risk management to fraud prevention, but beyond that, they are also intent on evolving in their use of analytics, by progressing from gathering raw data to deriving valuable information, then insights, and finally wisdom for decision-making.

In the social universe, a minute is not 60 seconds. Rather it is the time it takes to upload another 400 hours of video on YouTube, create 570 web pages, post 1,000 pictures on Instagram, send out more than 100,000 tweets and exchange $284,000 via online commerce.

Internet of Things Clearly, there’s no dearth of content out there for those who are looking. Actually, there never has been. But what’s changed is that banks now have the technological capability to cash in on social and allied trends such as gamification. This can help renew “standard” marketing and customer service operations, and more importantly, to create new value by putting them to work in “unlikely” areas, such as risk management, product and service personalisation, and customer education.

Exciting projections abound about the Internet of Things. But these will only be realised if the various devices and products of the IoT learn to inter-operate. Open Source Software and Technology is crucial to allowing this. Given open source’s demonstrated record in nurturing innovation, the bank of “renew and new” must forge ahead with OS adoption. Not just at the periphery or for minor renewal benefits, but especially in mission-critical applications that will gain enormously from a partner ecosystem enabling the co-creation of innovative financial solutions.

The good news is that a tailwind is already blowing in the form of a 3.4 million-strong exclusively-open-source developer community which enjoys the backing of the technology industry. It’s now up to the banks to open their arms to open source and soar.

Collaboration, which underpins the trend of open source, is also the force behind the API economy, which banks would do well to leverage to accelerate innovation as part of their “new” strategy. Gartner predicts that nearly one in four global banks rounding off the top 50 will participate in the API phenomenon to co-create with customers and partners to devise innovative products and solutions that solve problems at a grassroots level. This marks the beginning of a partnership economy where everyone wins — customers, app developers, and of course, banks.

With digital disrupting their business even as it transforms it, banks are thinking afresh about how to leverage the opportunity, manage the challenge, and emerge on top in a connected world. Adopting a “renew and new” strategy for optimisation and value creation respectively, while leveraging the five big trends of the digital revolution, lies at the heart of banking success in the new generation.

Head of Product Strategy & Pre-sales, Infosys Finacle

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