Banks in emerging countries such as India, Brazil, Malaysia and Russia are more likely to have an innovation strategy in place and invest in R&D so as to become innovation leaders, says an Infosys-Efma study.
The sixth annual study, titled 'Innovation in Retail Banking 2014', surveyed over 100 retail banks around the world.
The report found that more banks in fast growing and rapidly developing markets are displaying greater ambition for becoming innovation leaders in delivering superior customer value.
They are doing this by investing more in research and development compared to their peers in mature markets, the report added.
"Banks are most concerned by the threat from technology companies entering the market (for example Google, Apple and Facebook). The threat from this type of competitor was rated high by 45 per cent of banks and has increased in the last 12 months," the report said.
After technology companies, the most significant threat is perceived to come from telcos and from start-ups, it added.
As part of their innovation strategies, 26 per cent of banks surveyed said they are investing in start-ups.
Many banks organise their innovation activities around specific themes. Mobility is currently the most important theme with 88 per cent of banks rating the importance as 'high', followed closely by Big Data (67 per cent) and 'Social Channels (63 per cent).
Over 70 per cent of banks perceive mobile payments and services on multiple devices to be of high importance for delivering customer value in the mobile channel, it added.
"In times of continued pressure on profitability, there is no let-up in the demand from customers for innovative products and services. Many banks in rapidly growing emerging markets, who are used to generating profits from customers with smaller transaction values, are at the forefront of innovation in retail banking," Infosys Senior Vice President and Global Head of Finacle Michael Reh said.
Lessons on innovation from these banks could be extremely valuable to financial institutions around the world as they compete with new players in the market, Reh added.
