Banks are navigating massive structural change and prioritising product innovation, according to a new survey from financial services software company Temenos.
Results of the company’s seventh annual customer survey found 24% of respondents identifying product innovation as their number one investment priority. Other key priorities included digital channels, compliance with new regulations, and IT modernisation.
While regulation, new competition and changing customer behaviour were all highlighted as the cause of unease in the industry, maintaining customer loyalty was the single biggest concern and was identified by 30% of respondents.
“The banking industry is undergoing a once in a generation shift, a second big bang,” explained David Arnott, CEO, Temenos. “As these results confirm, it is digitisation, changing customer behaviour and regulation that are driving the change. What is encouraging about these results is that banks appear to be both cognizant of the challenges ahead and making many of the right investments to be able to offer the customer-centric banking services to compete successfully in the future.”
The survey also revealed a significant change in the attitude of banks towards cloud computing, with 86% of institutions running at least one application in the cloud. This is compared to 57% in 2009.
Concerns about data security are growing however, with 38% identifying this as a barrier to wider adoption.
“The fact is that, notwithstanding the changes taking place in the industry, banks have great assets to be successful in the digital age,” said Arnott. “They have large customer bases, significant amounts of transaction data and the ability to offer integrated services. The key will be in leveraging those assets to take a greater role in customers’ lives, helping them to make better budgeting and spending decisions. This will require banks to move to real-time systems, to improve productivity and agility and offer all products and services over all channels. This is no mean feat, but at least banks seem alive to this challenge.”
Juan Pedro Moreno, senior managing director of the global Banking practice at Accenture, an alliance-partner of Temenos, said: “For many banks, product innovation will need to go hand-in-hand with a new mindset. The most innovative banks will no longer think of themselves as mere providers of financial products and services and enablers of transactions. They will be solution providers that play a greater role not just at the moment of transactions, but before and afterward as well. They will aspire to be at the centre of the digital life of their customers. Mobile banking applications offering embedded payment capabilities and location-based discounts are just one example.”
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