Over the last couple of weeks have been catching up on innovations and trends in mobile telephony, entertainment, gaming and a few others...One gets the impression that we are perhaps noticing an "innovation deceleration" in the banking and financial services space!
With the introduction of and advances in Internet banking, ATMs, mobile payments, electronic fund transfers, smart cards, real time gross settlement systems etc., in the recent decades, you may believe the above remark is over critical! innovation in the banking and financial services space is hindered by :
a. Legacy Systems : Infrastructure and standards developed decades back may not easily permit the introduction of new generation financial products and payment services. Large migration costs make the business case for large spread introduction of new services challenging if not impossible.
The introduction of EMV in the UK recently requiring retailers and financial institutions alike to incur millions of dollars in costs would be a recent example
b. Adddressing New Customer Segments : One of the key challenges faced in enhancing the spread and penetration of banking and financial services to the bottom of the pyramid includes the account management and transaction costs in existing systems made unviable for low ticket sizes. Grameen has developed a new system ground up, but action awaited from global vendors on this front
c. Regulators : The central banks and other regulatory bodies are faced with the onerous challenge of advancing the use and penetration of "non cash" based services with the overbearing need to protect customer interest and finances. This often leads to large time spans for the introduction of new regulations on subjects including mobile payments.
Reliance Industries can construct a petrochemical complex in 30 months!.... whereas governing bodies can take a similar period in publishing a draft paper
Moore's law does not obviously apply in this space, and nor should we expect it. But quite clearly a need and an opportunity for the grey cells to kick in and business leaders to converge on the above.
The Revolution card is a recent example which questions the way in which we do business and puts forth a new paradigm. The need for new open platforms and standards that can support interoperability and rapid introduction of new products and services is even greater.
Which leads me to the question of the hour...which is the next ala "iphone" or "facebook" waiting to happen in this space? Would welcome your views....
