What Causes Profitability?

August 12, 2014
/   Spotlight

Digital Insight proves that digital bankers actually drive increase engagement and profitability with their financial institution.

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Platform Shift in the Making

February 13, 2013
/   Insights

What does the banking industry as a whole have to do with Amazon, Microsoft and Apple? Just about nothing—and down the road, it may turn into a major problem (if it isn’t already). Consider...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Financial Literacy Month: How are you celebrating?

March 22, 2013
/   Insights

With April approaching, it’s almost time to kick off Financial Literacy Month! Strongly supported by the United States Congress and the Financial Literacy and Education Commission, Financial Literacy Month aims to promote the importance...

Let’s put it out there: The banking industry is rising to the many challenges it currently faces, and the key to that ascension is innovation. One clear indication comes from the new report Innovation in Retail Banking 2013, commissioned by IT services conglomerate Infosys and conducted by the European Financial Management & Marketing Association (EFMA), which features a raft of good news.

The study, which surveyed 148 banks in 66 countries, shows that retail institutions around the world are systematically investing in innovation specifically to boost revenue and cut costs. A remarkable 60% of the banks now actually have an innovation strategy, compared to only 37% five years ago. Among other highlights, more than half (58%) say their deployment of new systems will have a positive impact on their ability to innovate even further, 69% are making moves into mobile location-based offerings, and 61% are working on enabling customers to do some form of product personalization. And of course, 77% already have in place or are working on a mobile wallet solution.

What’s just as interesting, however, is how all this innovation is coming into the organization. For example, Denver’s FirstBank is about to become the first regional U.S. bank to launch mobile photo bill pay. But the $13 billion institution, which has  more than 115 locations in both Colorado and neighboring states, didn’t outsource the development of its technology—with 12% of its employee base working in IT, the company developed its own core banking software and 12% of its employee base of about 2,100 works in IT. FirstBank sees this as a competitive advantage, and a way to move fast in response to market demands.

On the other hand, there’s Tioga-Franklin Savings Bank, which has a 140-year history in the Fishtown neighborhood of Philadelphia. The institution has long prided itself on its reputation for stability, but it has more recently recognized that there must also be change—its numerous manual processes required a major transformation in order to stay competitive. So, after a year-long search, Tioga-Franklin—the bastion of tradition—signed on with Data Center Inc. (DCI), of Hutchinson, Kansas, the force behind the iCore360 core banking software. The bank is now looking forward to significant enhancements in organizational efficiencies through workflow automation and regulatory simplification.

The big picture on change through innovation offers an even more diverse view. One interesting point: as noted in a recent column on the ABA Banking Journal, a remarkable amount of the real innovation seems to be happening in less developed markets.  Many market analyses make the same point.

For example, a broad study from consulting firm BearingPoint found that emerging economies are twice as efficient at innovating as their more developed counterparts. Similarly, PriceWaterhouse Coopers says that U.S. companies are certainly tracking with the shift in innovation strategy, but most pioneers in its study are actually not U.S. companies.

Finally, a contest launched by Accenture and EFMA to find winners of their inaugural global distribution and marketing innovation awards for retail banks handed out plaudits to entries from, among other markets, Nykredit in Denmark, Hana Bank in Korea, BRE Bank in Poland and Aktifbank in Turkey.

It’s not as if in the new world, all the rulebooks should be thrown out. In fact, we still should value industry best practices and see how they apply to us. But there’s also no question that at least some of the rules are changing, and we need to keep pace. Just think who our next great rival might be: Wal-Mart (which officially gave up the banking chase in 2007), Amazon (which clearly has many irons in the fire), Facebook (which has even more), some tiny technology startup, or someone different from all of the above.

In this competitive and rapidly evolving competitive environment, we know that innovation is both the best defense and the best offense. Where that innovation comes from, however, is a different question altogether.

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Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp

James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.