n n n n n
 
handelsbanken
RETAIL BANKING

sector Overview:

It is commonly said that retail banks are poor at innovation but this is not entirely fair. Innovation does occur but much of it is hidden, focusing more on new ways of doing business, rather than the development of new technology and products. Innovation in many banks is internal to the organisation and largely invisible to the customer. That said, many retail banks are, in the main, well behind the innovation game.

Most examples of retail banking innovation occupy the blurred region between process and product. Take for example the development of payment methods. The way consumers transact purchases is gradually changing; from the slow demise of cheques, to the wide availability of credit cards, debit cards and chip-and-pin and the new ways of making ‘contactless’ payment. Even that old stalwart, cash, is becoming marginalised. As electronic cash finally starts to make inroads, contactless cards are now the norm in some cities. Hong Kong’s Octopus card, a contactless stored-value smart card originally designed to enable payments on the city’s public transport system, is 10 years old and is now used at a wide range of retail outlets. Similarly over 5 million people regularly use Transport for London’s Oyster card, with over 10 million issued since its launch in 2003. In Europe contactless payment technology is beginning to be used as a way of making regular payments for small retail transactions; for example, customers using Visa’s ‘payWave’ system simply hold their card up to a secure reader to make their payment. In the UK, Barclays Bank’s OnePulse card, launched in autumn 2007, combines a credit card, cashless payment and Oyster travelcard in one product.

Alongside smart card-based transactions, payment by mobile phone using similar near-field communication technology is already available in Japan and Korea and, at the other end of the spectrum, Vodafone’s M-Pesa money transfer service is having a major impact in Africa. Given the pervasive nature and rapid adoption of mobile technology, widespread mobile payments are likely to scale up rapidly in other markets in the near future.

ONES WE ARE WATCHING

 

Barclays
Barclays is gaining first mover advantage in UK converged card services. The OnePulse card, launched in 2007, combines a credit card, cashless payment and travelcard in one product. Launched into the London market, such multi-use cards are destined for mass take-up. Barclaycard OnePulse has three integrated functions - it is a standard ‘Oyster’ contactless travelcard for cheap travel around London, it is a standard credit card, and it is a cashless payment card whose ‘OneTouch’ payments allow for small purchases at over 1000 participating retailers.

Zopa
A radical entrant to the market, Zopa offers a new business model based on peer-to-peer ‘social lending’, where an online marketplace allows lenders and borrowers to be matched, bypassing banks completely. As yet, the sums involved are small but Zopa’s model is already being copied in the US, Germany and the Netherlands. Whether social lending will pose a serious challenge to conventional retail banking in the near term is unclear but with ‘no banks in the middle, no huge overheads, no unethical investments Zopa could permanently change the way people save and invest their money’.

  

 

Adidas
Apple
Aviva
BASF
BMW
Boeing
Cannon
Google
Handelsbanken
> Company Profile
> Innovation Scorecard
> Sector Overview
> Innovation Drivers
H&M
Infosys
LEGO
Lilly
Medtronic
Microsoft
Nokia
NTT DoCoMo
PepsiCo
Reckitt Benckiser
Samsung
Shell
Starwood
Tesco
UPS
Virgin Atlantic