Banks globally still have miles to go in leveraging the latest technology, critical for making rapid strides in their digital transformation journey, a joint report of Infosys Finacle and Qorus has revealed.
The report titled ‘innovation in retail banking’ showed that most banks are yet to deploy digital banking transformation solutions at scale. Only 11 per cent of the respondents mentioned about their fully deploying digital banking transformation solutions.
The study, based on a survey of over 650 senior executives from global financial institutions, identifies benchmarks and innovation trends in banking, including innovation investments, competitive landscape, progress with digital transformation, and success with modern technologies.
Close to 90 per cent of banks globally still believe that their digital transformation journeys have not succeeded as per expectations, according to the report.
“If there is one thing that is coming out clearly in the report, is that banks need to leverage technology better. Because what was relevant five years ago is no more relevant because technology is moving in a much faster phase than anybody could imagine”, Rajashekara V Maiya, VP and Global Head of Business Consulting, Infosys Finacle told businessline in an interview.
While Infosys Finacle is part of EdgeVerve Systems, a wholly-owned subsidiary of Infosys, Qorus was formerly known as Efma (European Financial Management & Marketing Association), a global non-profit organization by banks and insurance companies.
Sharing the findings of the report, Maiya said that bankers were found wanting when it came to leveraging technology.
For the survey, banks with less than $10 billion in assets to those with more than $500 billion were considered.
Asked as to what are the key takeaways for bank managements from the report, Maiya said that one of the important element that was coming out is that “if you want to stay relevant and contextual to your banking customers, then you have to keep innovating and keep investing in innovations so that the relevancy and the contextuality continue from a customer point of view and the customer is not going away anywhere”.
Maiya said that banks have to do five things in a structured way.
“First and foremost, we found that the banks have to innovate better. The second is that banks have to engage better with the customers and with the partners. And the third one is that banks have to operate better for them to be relevant in the changing context of inflation and the interest rate regime. And the fourth one is that banks have to transform in terms of how to innovate better, engage better, operate better, and transform better.
Then there is one common thing that is coming out very clearly in the report for management—how to leverage the technology better”.
At the same time, Maiya noted that Indian banks present a different picture when it came to leveraging technology (most of the large Indian banks being ahead of the curve).
In fact, India has one of the most sophisticated banking environments globally when it comes to democratising payments, commerce, and credit using technology, as well as establishing a digital public infrastructure, stated Maiya.
Platformisation of Biz
Asked as to what could be the emerging business model that would work for banks in the next 5-7 years, Maiya highlighted the current trend of banks looking to become platforms.
“Many of the banks we surveyed responded that they would like to get into the business model of platform orientation. That means they would like to now look at getting into becoming a network provider, a platform provider where basically business service seeker and business service provider come together to make those transactions happen”, he said.
He said that globally, many banks are moving towards becoming a platform company because that is where they see a lot of synergies available for them to expand their businesses.
“Whenever a company, irrespective of the industry, becomes a platform company, there is obvious business growth that takes place. Hence, banks are also looking at that kind of platform business. That’s what we have found out in our report”, he added.
Maiya highlighted as to how the top eight of the top ten most valued companies in S&P are platform companies. Also 60 per cent of the global unicorn companies are basically platform companies.
Asked as to which are the technology initiatives that banks need to adopt, Maiya said that one is in terms of opening APIs, the second one is in terms of working very closely and collaboratively with the ecosystem, and the third one is to make sure that “you have your systems and your APIs exposed in a cloud environment so that people can test it out in a sandbox environment that is provided”.