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Leveraging Vendor Relationships to Foster In-Branch Innovation


In its Retail Banking 2020 report1, PwC asserts that innovation will be the single most important factor driving sustainable top- and bottom-line growth in banking over the next five years. Another recent study shows that banks are making innovation a strategic priority and investing more to boost their innovation performance and counter threats from new players.

However, while innovation has come a long way in recent years, with the successful implementation of mobile banking and enhanced data capture and analysis, the banking industry’s tendency to exercise caution and employ multiple levels of process and oversight in response to regulatory pressures can limit the pace of innovation. While a majority (69%) of respondents in the Efma and Infosys Finacle study2 believes banks are becoming more innovative, only a quarter of respondents rate their innovation performance as high. There is an obvious need then for financial institutions to establish partnerships and third-party relationships to assist with their desire for innovation.

The Value of Vendor Partnerships

Much like how automakers rely on specialized suppliers to keep up with emerging trends and offer vehicles with the latest technology, financial institutions should work with vendors who invest in research and development (R&D) and have strong patent portfolios. Financial institutions can then be in position to reap some of the rewards of that innovation and more quickly accomplish their own goals.

While many in the banking industry3 believe that technology holds the key to overcoming business challenges, many acknowledge that their organizations are not in a state of readiness to achieve their technology objectives. Individual banks may not have the staff or resources to fulfill all of their own technology goals; however, vendors in this industry that place an emphasis on innovation feature large teams of engineers that are continually looking to develop the next big breakthrough, while enhancing current products to offer more features or make them more durable and efficient.

Customer feedback is a key tool in any bank’s toolbox, as that data can be used to tailor products, improve customer experience and spot trends earlier. Likewise, it’s critical that financial institutions share this feedback with their vendor partners to influence the development, design and engineering of new products. By doing so, these institutions can stay ahead of the market and ensure that solutions developed are in line with the issues being faced by their branches.

Technology to Build Stronger Branches

To remain relevant, banks must not only focus on today’s customers but those of the future. That means going beyond making incremental improvements and focusing on holistic changes that will transform how services are delivered across every channel—including the branch.

While banks have been quick to embrace mobile and online banking channels, the branch must also become more productive. This can be achieved by utilizing easy-to-use self-service technology in the front of the branch and innovative solutions for processing currency and checks behind the counter. By identifying processes that can be simplified or automated, such as branch or teller image capture and coin processing, and working with a vendor to make these tasks more efficient, customer satisfaction can be positively impacted, in the forms of reduced wait times and more face time with banking personnel. This can also have a direct impact on profitability and sales, as personnel can be refocused to work on higher value-added activities such as cross-selling or working with new clients.

Just as technology is making it easier than ever for customers to compare rates and features of different banks and simplify the process of transferring accounts, new or refined technology can go a long way toward helping branches remain relevant in the eyes of customers. As banks rethink their branch strategy, technology investment should be a critical part of the decision-making process.

Navigating Your Vendor Options

With many vendor choices available, though, how can banking executives be sure that the companies they’re working with truly foster innovation and that they’re not purchasing outdated technology? The biggest clue can be to examine how much each company invests in research and development. By comparing R&D investments, examining patent ownership, and looking at industry recognitions for innovation and product efficiency, financial institutions can find trusted partners who can help position them for long-term success.

With innovation at the top of all financial institutions’ wish lists for the new year, it’s important to remember that these companies don’t have to do it all by themselves. Vendor partnerships can be an incredibly valuable tool, and this cooperative relationship can greatly aid banks in meeting their technology goals.


1 PwC, “Retail Banking 2020: the future of the retail banking industry”

2 Efma, “Innovation in retail banking: The emergence of new banking business models”

3 Infosys, “Agenda 2016: Top Technology-led Implications & Priorities for Enterprises”