In a financial services Thought Leadership Paper released today, the Australian Information Industry Association also urges the banks to increase their collaboration with each other if they are to counter what it describes as the “inevitable onslaught” from financial services organisations outside the banking industry.
The AIIA does say that Australia's financial services system is a lot more functional than some of its more fragmented overseas counterparts but customers, however, are increasingly demanding that payment tools contain more “value-added components such as financial dashboards, coupons, loyalty, invoices, and discounts."
Lead author of the AIIA paper, Patrick Crooks, says that "the mobile can deliver all of these expectations, and more: micro-payments, better control, immediacy, and better information."
"Mega brands such as Google and Apple are successfully turning business models upside-down in a number of industries - financial services will not be spared.
"All banks know that they need to innovate, but they operate in an environment that is actually detrimental to innovation itself."
According to Crooks and Li, one of the problems is that larger banks attract “greater regulatory and public scrutiny due to their significance to the economy and with the Global Financial Crisis being blamed on too much innovation, this scrutiny has intensified.”
"They have so much more to lose than new entrants – fear of failure understandably paralyses some organisations. It is extremely brave to radically redefine an existing business model – it's so much easier to tinker around the edges," the co-authors say.
The paper examined the impediments to fast innovation in large organisations, and found that too many people, decision points, or technology integration points can all add to delays on a project. “Counter-intuitively, increasing external touchpoints can actually increase innovation speed by increasing complementary innovation, using social media for immediate product feedback, and the new trend towards crowd-testing,” Crooks suggests.
Concludes Crooks:"When standing at the edge of the innovation "gene pool", executives now have to decide: Do we just dip our toes in the water, or do we jump right in?"