Leading through innovation

The future of banking in emerging markets

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Sparked by innovation, smart banks are changing the game.

Innovation is a business imperative for banks all over the world. In emerging markets, the pace and promise of innovation are even greater. Banks must do more to keep up, or be left behind. But many banks in these markets are not innovating as fast as they should be to remain competitive.

The “business as usual” approach will not address the challenges faced by banks in emerging markets, particularly as competition from nontraditional market entrants increases. Nor will it satisfy the enhanced expectations of their customers. The pressure is on banks in such regions to completely transform their approach across almost every segment of their value chain.

Fresh thinking is improving service for bank customers around the world.

  • In Indonesia, “floating banks” are capturing new customers by traveling to island populations.
  • In Poland, customers can use a smartphone app to request a “mobile ATM” – housed within an electric BMW i3 – to come to them at a specified place and time.
  • In Kenya, banks are partnering with mobile network providers to assess credit risks of first-time bank customers.
  • Unencumbered by market restrictions, a bank in Brazil has expanded beyond traditional banking to offer customers concierge-type services, such as hotel booking or restaurant reservations.

A modern banking business, driven by speed.

Banks are taking different approaches to how they make these shifts. Some are making incremental changes, while others are embracing a more radical realignment away from business as usual.

For some banks, the creative thinking comes from investment in building internal capabilities, while others are collaborating with third parties. We are also seeing examples of cross-industry incubation and technology accelerator labs where ideas can be nurtured and tested in experimental environments.

Routes to developing new ways of banking are novel and diverse but share a common goal: to bring new ideas to fruition quickly. Speed to market is critical in meeting the rapidly evolving needs of customers, defending increasing competitive pressure and managing specific challenges of banking in emerging and rapid-growth markets.

Only innovation can solve the toughest banking challenges in these markets.

To stay ahead of the competition, banks in emerging markets need to swiftly roll out fresh strategies in five priority areas.

 

EY - Reinventing the customer experience

Reinventing the customer experience

In developing regions of the world, banking customers are often younger, less loyal and more likely to be driven by price and convenience.

EY - Serving the unbanked population

Serving the unbanked population

Billions of people in the emerging markets have never held a banking account.

EY - Finding and developing the best talent

Finding and developing the best talent

Banks in rapid-growth markets need entrepreneurial and diverse skills but face increasing competition to attract and retain this talent.

EY - Leveraging agility in an underdeveloped banking ecosystem

Leveraging agility in an underdeveloped banking ecosystem

Free of legacy processes and cultures, new emerging-market banks are tapping into emerging technologies as a springboard to success

EY - Influencing and innovating in an emerging regulatory environment

Influencing and innovating in an emerging regulatory environment

Banks in developing markets can influence the regulatory landscape before structured supervisory guidance is introduced.

EY - Leading through innovation: The future of banking in emerging markets

Leading through innovation: The future of banking in emerging markets

Sparked by innovation, smart banks are changing the game.

 

“Even though we have been quite successful over the past 20 years, we must look ahead and understand that there is a new and very strong trend happening in the banking world that is totally different from almost everything that we have seen before.”

Márcio de Andrade Schettini, Director, Itaú Unibanco

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