Despite an intensely challenging environment, banks around the world are increasing their investments in innovation. This is a key finding of Innovation in Retail Banking 2012, the fourth annual study commissioned by Infosys and Efma.

The study of 300 bankers in 66 countries across Europe, the Middle East, Africa, the Asia-Pacific region, and the Americas also found that online and mobile channels are growing rapidly.

Seventy nine per cent of banks see innovation as strategically important to the future success of their business. Seventy six per cent said that investment in innovation in 2012 has already increased over the previous year, mostly in the areas of channels and customer experience. Bank branches receive the highest proportion of discretionary IT budget at 27 per cent, compared to 26 per cent for online and 20 per cent for mobile – yet there was a consistent view across the regions that online and mobile are the most important channels for innovation.

Ninety three per cent of banks expect to offer mobile payment services and 89 per cent plan to offer bespoke tablet banking applications to customers within the next three years; the area of fastest growth comes from innovations in value-added services such as personalised location-based offers, a space where within three years more than 76 per cent of banks will shift focus to, up from just eight per cent today. Eighty seven per cent are focused on integration with social media, and 86 per cent on interactive services, such as web chat, video conferencing, and click-to-call.

Haragopal Mangipudi, global head – Finacle, Infosys, says: “In spite of the challenging economic environment in many parts of the world and the competitive pressures on retail banks, it is very encouraging to see the recognition that innovation is essential to long-term growth. All too often there is the tendency to allow other priorities to slow down the pace of innovation. But banks are acknowledging that they need to innovate to succeed.”

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