Scaling Digital Innovation

With the ongoing digital disruption, incumbents have seen their competitive advantages, whether reach through physical channels, product differentiation, or customer loyalty, erode steadily over the years. To a great extent, this is because the new digital-native players are using modern technology and innovation to diminish those advantages while differentiating themselves with embedded finance offerings, great experiences, and highly cost-efficient services. The vertically integrated pipeline business model is unraveling as new models built around platforms and ecosystems take their place in the banking industry.

In this digital-first era, to stay competitive, we recommend a holistic approach to innovation along three key dimensions.

Reimagining the business model to develop a clear differentiation and an area of excellence, such as customer experience leadership or cost leadership, or industry segment leadership

Scaling organizational capabilities around people, process, technology, and data to bring innovation to life faster

Accelerating creation and delivery of value through product, channel, and ecosystem innovations

Reimagine Business Model

for the Post Pandemic World

With diving interest rates, slower economic growth, and rising credit losses, Covid 19 has further accelerated the need for business model reimagination. Broadly, a bank can revise its business model by focusing on an area of excellence and differentiation, Or by evolving its existing model into an alternative platform model, such as marketplace banking. And while each bank will chart its path based on its unique circumstances, all banks, without exception, will need to expedite business model innovation to survive the next normal.

With its cloud-native, functionally rich, and open solution design, Finacle is well-placed to support all types of business model requirements. Highlights include:

The componentized and microservices-based architecture provides banks the flexibility to launch and evolve new offerings at speed

Banks can compose contemporary digital business models with ease, using open APIs, webhooks, and App Centre

The comprehensive and versatile suite is proven across financial institutions of all types - established or emerging, global or regional, omnichannel or digital-only

Emirates NBD Group launched Liv. Bank – a digital-only lifestyle bank and attracted more than 370,000 customers at 20% of a traditional institution’s acquisition costs. It is one of the few digital banks to have reached profitability in 14 months after launch.

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Scaling Organizational Innovation Capabilities

In our annual global innovation survey, only 9 percent of banking executives rated themselves as “innovation pioneers”. Another 32 percent said they were “fast followers”, leaving 59 percent in the mainstream or laggard categories. With the growing competition coming from incumbents, challengers, and digital giants, the status quo is unsustainable.

To help drive continuous innovation, Finacle partners with banks to elevate innovation capabilities across the key dimensions of people, process, technology and data. Highlights include:

Agile ways of working enabling cross-functional teams to experiment, learn, and adapt to deliver new value rapidly

Customer-centric journey design and straight-through processing, driven by rules, APIs, and blockchain-based smart contracts

Cloud-native, componentized, and open APIs driven technology platform help banks to transform into an agile, scalable, and open enterprise, ready to benefit from new-age possibilities

DevOps toolchain helps banks to build, test, deploy, and monitor new capabilities with speed to stay ahead of the competition

DBS Bank is an innovation leader – From Singapore’s favorite mobile wallet to India’s first paperless, branchless, mobile-only bank, DBS has pioneered several innovations. DBS digibank gained over 1.8 million customers in India within just 18 months of its launch.

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Accelerating Product Innovation

Finacle offers a complete range of digital banking product engines such as deposits, loans, trade finance, wealth management, payments, and cash management to help banks design products and services for various customer segments. Banks can go-to-market faster with Finacle’s flexible product factories that bring global innovations to life with simple configurations. Banks running on Finacle have realized an average 17% improvement in speed-to-market with new products and services. Highlights include:

Business users can leverage several thousand parameters and reusable business rules to configure products and services instantly

End customers can design and personalize products and services on self-service digital channels for their unique needs

Flexible product templates empower banks to create new products by modifying existing templates and rapidly deploy innovations to market

Product managers can configure and launch co-branded or white-labeled third party products and services

Banks can bundle a variety of products and services to power right upsell strategies

Paytm leveraged unique business models to transform from being just a wallet provider to playing an integral role in the digital life of a million customers.

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Scaling Channel Innovation

Unfolding digital trends have put a significant urgency on channel innovation. For illustration, 20 years ago, 50 percent of banking transactions occurred inside the branch; today, that figure is barely 5 percent since 95 percent of transactions happen in digital channels. And it is expected that in the next few years, 50 percent of bank transactions will move to non-bank, third party channels, thanks to embedded finance and open banking initiatives.

Finacle help banks drive channel innovation to engage better with their customers, employees, and partners. Built on a unique engagement hub, Finacle suite helps banks onboard, converse, service, and sell better with customers. In fact, banks running on Finacle have realized an average 19% improvement in their NPS scores. Highlights include –

Unique digital engagement hub for omnichannel innovation design and delivery

A comprehensive suite of packaged channel solutions covering traditional, modern, and emerging channel experiences

A full suite of open APIs and webhooks for accelerating channel innovation

Ecosystem Innovation

The traditional pipeline based banking model, driven exclusively by owned products and channels, is becoming ineffective in the digital environment. Progressive banks realize that opening up to new and diverse partner networks within a larger ecosystem is the way to differentiation and new sources of revenue.

They strive to win, serve, engage and retain customers by continuously creating improved and new value with ecosystem partners. Finacle enables banks to achieve this by offering a range of capabilities, including –

Pre-packaged API store for ease of collaboration with the external partner and digital ecosystem

Blockchain-powered innovation networks across payments, trade finance and digital identity

A broad suite of open APIs and a strong innovation ecosystem powered by the Finacle App Center

Paytm payments bank offers a preview of what future of banking may look like with its marketplace banking approach. With dozens of co-innovations with financial and non-financial service providers, Paytm is a role model for new-age digital banks.

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