Shaping the ICT Banking Inovations for the Future
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Transcript of 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)
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