Shaping the ICT Banking Inovations for the Future

7/31/2019 Shaping the ICT Banking Inovations for the Future

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Shaping the ICT/BankingInnovations for the Future

Priam KasturiratnaACI-Ops, CISM, CRISK,

AIB(SL), MBA(Sri J)

[email protected]

29th National Information Technology Conference24th -25th August 2011, Colombo, Sri Lanka


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What is Banking today?

An organisation that provides various financial servicesto people and businesses

(Source: Oxford Business English Dictionary,2008)

A Regulated Industry

Highly dependent on

Public Confidence, Trust& Reputation

Deposit TakingLending

Trade Finance

Treasury

Credit CardsTravel Services

Wealth Management

Bank Branches

ATM

Voice Fixed & MobilePhones

SMS- Mobile & FixedPhones

Internet- Fixed & MobileDevices


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What is Innovation?

INNOVATION - Introduction or Development of new things; ideas or waysof doing

(source: Oxford Business English Dictionary,2008)

INNOVATION IS NOT INVENTION

Changing the way we think, or act

Vision, Thinking & Behaviour rather than Technology


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Realities of Banking

ICT forms the backbone of Banking

Banking Innovations are synonymous with

ICT/Banking Innovations

Apart from Strategy & Management,

Innovation is a key driver of the future of

Banks.


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Approaches to Innovation

1. Build Innovation into the

organization DNA


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Fostering Innovation

1. Encourage Employees to use part of theirtime for Innovative thinking & planning

2. If an idea works, incorporate it intooverall business.

3. Get delivery channel teams to

brainstorm new customer journey orexperience from time to time.

4. Look at new ways of engagingthe customers.

5. Prototype the customer journey onpaper. Sketch up web, mobile, or ATM

screen flows to show how the interactioncould be simplified and improved

6. Use behavioural analytics to improveInnovation.

Source: Bret King(2011)


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What are Customer Inspiring Innovations?

Innovation

Improvesinternal

efficiency

Increased short term profits;may assure long term profits too

Serve acustomer need

today, or in

future(Inspire)

Attract new customers

Generate loyalty among existing customers.More Futuristic and long lasting the

Innovations will benefit the Bank longer

Customer Inspiring Innovations rich in both these aspects will eventually set new trends

and benchmarks in the industry


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Small Innovations Grow over time

If not practical to provide a full service, start a basicservice.

Expand Delivery through all stable and increasingly

popular

So customers will stay with you.

channels

technologies

devices


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Have not the Banking industry Innovated?

Image Based Cheque Clearing

Real Time Gross Settlement System (RTGS)

Same day low cost Interbank Payments (SLIPS)

Online access to Credit Information Bureau (CRIB)

Regulations in line with developed financial centres

Online- Regulatory Reporting

Banking Ombudsman

Defences against Money Laundering and Terrorist Financing

Whistle Blowing

Risk Management and Corporate Governance

Almost all local banks became more profitable

Opened 48 new branches and installed 91 ATMs in 2010


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Have not the Banking Industry Innovated?

Virtual Banking

Internet Payment Gateways

Bill Payment Portals

Bulk Payment Processing (Inter/Intra Bank)

Investment options over Internet

Inter-bank Payments and Credit Card Settlement

Letters of Credit Opening/Amendments over Internet

Cheque Image view over Internet Banking

E-Statements

Mobile Phone Top-up, and other integrations with Telcos to provide new services (SMS based etc)

Electronic Remittances, Local/Foreign


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Innovation Why?

For leadership, & to stay one step ahead in fulfillingcustomer requirements.

To improve the overall customer experience ;

Build customer Trust & Loyalty

To embrace & prevent alienating from technology trends &gadgets.

To survive from Competitors, & make it difficult for others

to eat into the market share.

To drive growth, reduce costs & ensure long term

prosperity.


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Then, Why Banks fall behind in Innovation?

Organizational inertia

Internal Controls &Regulations

Strategic Blindness

to Innovation

Lack of

customer focus

Leadership Style &

Top Mgt Profile

Product Positioning

& Persistence

Managing HR &Org. Culture


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Organizational Inertia

Large organizations take longer time forcompleting projects.

Risk/Compliance

Allocation of development resources

Policy requirements

Poorly performing staff

Testing delays

Other internal inefficiencies


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Strategic Blindness to Innovation

Survey Result of senior managers from 89 Banks in 26 countries

across Europe

75%think that Innovation is HIGH or VERY HIGH for growth and

efficiency

BUT

Only 37% of the Banks had a clear Innovation strategy.

Less than 15% had a department responsible for coordinating

innovation.(Source : European Financial Management & Marketing Association and Infosys Technologies Ltd, India)


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Strategic Blindness to Innovation

Do Banks have R&D units, budget & targets? IF NOT - Its

A Corporate Governance issue

A Strategic Risk

Success Today is not Success Tomorrow - must

beware of Myopic situations


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Leadership Style & Top Mgt. Profile

Top Leadership decides whether a Bank will

Innovate

market existing products Innovatively to earn higher profits

do nothing Innovative and perish

Survey of 199 US Banks indicate that more Innovative Banks are

managed by

More educated top management teams

Top Management possessing functional expertise in wider range of areas

(Source : Bantel & Jackson(1989) Top management and innovations in banking)


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Product Positioning & Persistence

Innovations

Positioned to the correct customer segment

Issues need to be Tracked and Addressed positively &

promptly Have faith on the success


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Managing HR & Organisational Culture

Who is going to Innovate for Banks?

Innovators may have their own egoistic needs to fulfil

Innovators may not blend with the organizational culture

They may get branded as mismatches because they are too goodat Innovating


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Challenges for HR & Top Management

Retaining IT/Banking Innovators & Inspiring them to

Innovate

Creating Innovation friendly culture

Maintaining Cross functional harmony withInnovators and Marketing

Banking operations

Risk/Compliance Finance

Legal, Audit etc


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Challenges in Banking Innovation

Organizational inertia

Internal Controls &Regulations

Strategic Blindnessto Innovation

Lack ofcustomer focus

Leadership Style &Top Mgt Profile

Product Positioning& Persistence

Managing HR &Org. Culture

If a Bank can successfully manage these Challenges, path towards Innovation is clear.


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Future - Keep an eye on

Smart Devices - iPhone and Android applications Internet Banking and IVR based Services

New Card Products

Near Field Communications

Online Share, Bills/Bonds/FOREX Trading Improved Customer Service Standards

Improved Online presence

Social Media and Online channels as an engagement platform

Blogging, Facebook, Twitter for information distribution, marketing andrecruitment


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Future of Banking Innovations

Future of Banking depends on Recognising the significance of ICT/Banking Innovations

Fostering an Innovation conducive organisational culture and policies

Identifying, Developing and offering Visibly Significant Customer Inspiring Innovations

The more the Bankers develop these, they will,

Continue to Innovate & be closer to customer needs;

Provide Visibly Significant Customer Inspiring Innovations

Define the ICT/Banking Innovations of the Future.


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The Reality- Conclusion

Innovations cannot

replace the need

for

Business Strategies Alignment with Customer

needs


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The Reality- Conclusion

What is Absurd today can be the

Norm Tomorrow


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Thank you

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Shaping the ICT Banking Inovations for the Future

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