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Over 50% of Global Retail Banks Expect Digital Investments to Yield Measurable Returns by 2020: Infosys Finacle-Efma Research

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CEO Insights Team

CEO Insights Team

Infosys Finacle, part of EdgeVerve Systems, a product subsidiary of Infosys (NYSE: INFY), and Efma, a global not-for-profit organisation, today launched the ninth annual study of Innovation in Retail Banking. The research revealed that technology investments in 2018 will revolve around 'topical' areas such as information security, advanced analytics and open banking APIs, as opposed to 'future-looking' areas such as conversational AI, robotic process automation, the Internet of Things, augmented reality or virtual reality. However, 70% of organizations planned to support a conversational AI solution, with close to 25% having made investments in AI.

According to the report, retail banks continue their thrust on innovation in all functional areas, with customer experience and channels (both at 78%) being at the forefront. Other segments that have witnessed higher spends in innovation include products (67%), process improvement (64%) and marketing (57%).
The research, in which over 300 bankers globally participated, found that retail banks consider large technology companies, challenger banks, and smaller fintech start-ups as threats to their growth. Similar to 2016, the greatest impact of transformation is expected to be in the areas of payments and mobile wallets.

Other key findings:
• The top three innovation challenges include systems integration, legacy technology, and the time and cost required to move from concept to reality
• Small and mid-size banks are falling behind in virtually all levels of innovation, reflecting an inability to invest, the impact of competing priorities, the need to focus on cutting costs and respond to compliance requirements
• More than 50% of respondents expect to see a measurable ROI from their investment in innovation in 1-3 years; more than 30% expect to see results in less than a year
• Only 10% of respondents have a robotic process automation solution
• There is a vast distribution on the level of maturity within organizations leveraging data-driven insights. Nearly 37% of banks believed they were able to provide only descriptive analytics based on what had already happened. Nearly 20% of banks (usually larger firms) stated they have sound predictive capabilities and can help customers understand what will happen in the future. Interestingly, only 15% of banks were able to provide advisory or prescriptive capabilities around what the customer could do in the future given the insight known
• The challenge of acquiring the right skills and expertise in innovation led areas such as AI, blockchain and digital banking is a major concern across the industry