Tag: Innovation

What is innovation? Innovation doesn’t always simply represented through introducing or implementing new thoughts or strategies. The definition or meaning of innovation may describe as a technique that entails more; than one activity to discover new methods to do things.

It should not exist harassed with creation due to the fact this may define as the act of making, inventing, or producing something. However, improvements may exist found with creativity. People need to think out of doors the box to create incremental improvements.

At this second, we are located in a fast-paced environment wherein the era is advancing and globalization is growing. This method that distances simplest get shorter; and as a result, the opposition is increasing, purchaser expectancies are more stressful, and disruptions inside the economic system are more likely to arise.

For a business or an organization to realize aggressive blessings; it needs to be capable of adapting and innovating to the converting developments and new generations. Innovations practice controlling corporations on all ranges, sizes, and in running in all industries.

Innovations create larger possibilities and are important for the survival, economic growth, and success of a business enterprise. Also, Innovating allows develop authentic standards and is a driving force for optimizing operations. Companies that innovate can set the agency in an exceptional paradigm to perceive new possibilities and the quality strategies to solve modern problems.

  • How to Effect of Innovation Culture in Organizations?

    How to Effect of Innovation Culture in Organizations?

    How to Effect of Innovation Culture in Organizations? Explanation!

    One of the most vital capabilities of an organization is innovation and that in organizational culture is really critical. The effect of innovation can effect in both positive and dark ways for an organization or say a company with the higher number of the consumer with different needs and demand. The challenges for innovation culture are both predictable and unpredictable. Predictable challenges can be overcome by forecasting abilities but unpredictable challenges can result in disastrous turnings. For example, if a company makes changes in its management hierarchy say it replaces its supervisor that can result in either widening communication gap or erase that further can result in better production or a worker strike. While one’s innovative abilities are partially genetic, the expression of creative talent is dependent on several cultural aspects of the work environment which either suppress or stimulate innovation culture.

    Before going any further, it is important to define innovation. Innovation is not about coming up with clever ideas. Creativity is about coming up with the idea. Innovation is about applying the idea to obtain value. To be clear, innovation is the act of changing the established way of doing things. The ability to turn knowledge into value and link emerging technologies with emerging markets. Innovation is about bringing creative new ideas to life. The Importance of Leadership in an Organization.

    Within an organization, it is important to understand where and how to apply innovation to create true value. The first question that should address is “What do you want to gain from innovation?” Surprisingly, this identification of a clear goal is often ignored. But without a goal, it is impossible to quantify the value realize from innovation. Some goals for an innovation program include enhancing brand and image and increasing shareholder wealth, return on investment and market share.

    Describe the effects of Two types of an innovation culture in organizations

    Positive Effects

    Promotes individual growth: One of the most vital effects of innovation culture is that it promotes individual growth. Employee’s willingness to invest in creative energy at work is encouraging from the employer’s desire to invest in the employee’s growth. When employees believe that their own development and growth are valued by their employer. They are more likely to make innovative contributions. Also, employees who are knowledgeable about their company’s processes. Products and services are better equipping to discover innovative solutions and ideas.

    Build Confidence: Experience, encouragement, and freedom bring confidence from the fear of making a mistake. Confident professionals are aware of their abilities, do not fear defeat, and are likely to experiment with innovative solutions. Encouragement is a big part of instilling confidence in individuals, especially younger employees. Confidence plays a vital role in developing an individual’s skills and abilities.

    Optimizes the Work Environment: Innovation culture in workplace results in optimization of workforce ability and quality production. Which finally leads to the betterment of the organization. Cross-functional teams should have the ability to immediately reserve private spaces where adequate seating. Whiteboards or flip charts, and overhead projection screens are available. Work environment has high importance in the area of production and quality of a product.

    Adapting to rapidly changing environment: The organizational environment has been changing rapidly. It is a set of forces and conditions outside the organization’s boundaries that have the potential to affect the way the organizations operate. An organization interacts with its immediate task environment and is affecting the general environment. The task environment includes the suppliers, distributors, competitors, and customers. While the general environment includes forces that are economic, technological, socio-cultural, demographic, political and legal and global.

    The external environment has been becoming more turbulent as most companies are now competing in the global market where changes are not only common but substantial. Some changes are catastrophic such as economic depression and the introduction of new technology. During poor economic times, managers may need to come up with the creative strategy to reduce costs such as reducing the number of employees on the one hand and to increase the motivation of the remaining employees. Managers may also need to identify ways to acquire and utilize resources more efficiently.

    Negative Effects

    Unpredictable challenges: Innovation culture cannot overcome the unpredictable challenges which can lead to the major breakdown in an organization. Even if the changes are made for the better and quicker production of the goods or services the needs and demands of the consumers can fluctuate at any point in the time. In, which case company or the organization have to bear the losses and the damages done by the lost demand of the customer.

    Communication gap: One of the most vital effects face by the organization generally after implementation of the innovative changes is widening in the communication gap between employees and the employer. If the communication gap increases between co-workers in an organization increase. It results in the conflicts and many kinds of argument within management and workers.

    Adaptation of Innovation Culture in Organizations

    It is difficult to implement innovative culture and even if it is implemented then it is difficult for the employees or members of any business organization to adopt. Innovation is an indisputable catalyst for the development of the company, yet many managers in the industries have failed to encourage innovation and create an award-winning environment. Companies should set the infrastructure for innovation, to initiate the necessary changes to promote the right culture and guide the organization through recurring periods of change. As companies try to transform innovation from science to science, the purpose of this is not only to implement the organization in the work of innovation but how the organization has to change the nature of innovation.

    For example, many IT innovations of the last forty years consisted of mechanizing existing processes. Rather than improving the process, the focus was on making the process faster. Today’s innovation is about asking whether this is the right process and if necessary, being able to change it entirely. Innovation is increasingly seen as important to gaining and maintaining a business advantage. However, innovation is easy to say, but hard to do right. It requires a significant investment of time, money and resources as well as access to world-class research partners. Achieving this requires a diverse sponsorship base and outstanding staff. Think of it as evolution in action.

    How to Effect of Innovation Culture in Organizations - ilearnlot

    Reference

    1. Effect of Innovation Culture in Organizations – https://www.mbaknol.com/management-concepts/innovation-culture-in-organizations/

  • Innovation Culture in Organizations

    Innovation Culture in Organizations

    What is Innovation Culture in Organizations? Meaning and Definition!

    Innovation culture is the work environment that leaders cultivate in order to nurture unorthodox thinking and its application. Workplaces that foster a culture of innovation generally subscribe to the belief that innovation is not the province of top leadership. But, can come from anyone in the organization. Innovation cultures are the prize by organizations that compete in markets define by the rapid change; maintaining the status quo is insufficient to compete effectively, thus making an innovation culture essential for success.

    Innovation cultures often measure employees based on metrics such as value creation (for customers as well as for shareholders) and competitive differentiation. Instead of traditional metrics such as on-time delivery and revenue generation. Companies that foster innovative thinking also encourage discovery and find ways to reward time spent on the research required to generate new products and ideas. A much-cited example of this is Google’s “20% time” policy. Which allows employees to spend one-fifth of their work week on what they want to work on. With the expectation that this discretionary work will result in an “aha” moment.

    Understanding Innovation Culture in Organizations

    Growth creates a need for structure and discipline, organization changes. Which can strain the culture of creativity that is so vital to future success? To sustain competitive advantage, companies need to institutionalize the innovation process; they need to create an internal environment where creative thinking is central to their values, assumptions, and actions. Characteristics with Factors Influencing of Organizational Climate.

    Innovation is the engine of growth. It is also a mindset – meaning it is influencing beliefs, values, and behavior. Company culture, therefore, has a huge influence on innovation, being able to either facilitate it or restrain it. Realizing this, many companies have attempted to put systems and processes in place that encourage an innovation culture. However, while such measures are often viewing as the panacea, they are really just the beginning. To shape a true innovation culture, the top people in a company need to develop a mindful approach. Where their every action and word reflects a real desire to encourage and develop new ideas.

    Innovation Culture in IT Organizations

    Three ways IT organizations can create an innovation culture is by embracing digital, establishing innovation labs and rewarding discovery.

    Embrace digital

    Innovation is par for the course with companies that aim to make the shift from traditional to digitalized business processes. Indeed, “going digital” is often the first step toward creating an innovation culture that permeates the workplace, rather than resides solely in IT or other pockets in the enterprise. Examples of digital projects include mobile payment and mobile product recommendations initiatives as well as any real-time network data provisioning. Each requires innovation. Until a few years ago, these projects were impractical and cost-prohibitive.

    Establish an innovation lab

    Creating an innovation lab serves many purposes, but one happy byproduct of such labs is a renewed collaboration between IT and the business because business innovation is closely tied today to information technologies. A real-world example is the innovation lab at Toyota Financial Services. Vice President and CIO Ron Guerrier started an innovation lab in 2011 for businesspeople to come and kick the tires, so to speak, on new automotive technologies.

    Enabling and rewarding experimentation

    An innovation culture allows people to experiment. For instance, an IT organization crawling through historical data, with no specific questions in mind. Might turn up findings that were totally unexpected based on correlations in the data. Nascent big data and improved higher-performance analytics engines are making data discovery exercises that were previously too time-consuming or cost-prohibitive for most companies newly practical.

    Innovation Culture in Organizations - ilearnlot
    Photo Url – https://pi.tedcdn.com/r/tedideas.files.wordpress.com/2017/03/frugal_innovation.png?

    Reference

    1. Innovation Culture – http://searchcio.techtarget.com/definition/innovation-culture
    2. Innovation Culture in Organizations – https://www.mbaknol.com/management-concepts/innovation-culture-in-organizations/
    3. Innovation Culture in IT Organizations – http://searchcio.techtarget.com/definition/innovation-culture

  • Do Survival is the Mother of Innovation? Explanation

    Do Survival is the Mother of Innovation? Explanation

    Survival is the Mother of Innovation in Banking Sector: “Banks can provide innovative products and services to their corporate and retail customers only when creative people are in place along with the latest technology. Such people might provide innovative ideas to customers and banks. By converting their acceptable ideas into reality, banks can get an edge to compete effectively in the global village. Indian banking is also changing its shape rapidly by adopting innovative technology, products, and services.” So, what is the question going learn; Do Survival is the Mother of Innovation? Explanation.

    Here is the Explanation; Do Survival is the Mother of Innovation?

    Innovation is the key to success in any activity, Innovation banking is therefore not an exception. Innovation-banking is possible only when we have innovative people in banking. Moreover, innovative ideas of such people have to be heard at the right time by the right people. Only then the needed encouragement and support is given to convert such innovative ideas into reality. Customer Relationship Management in the Banking Sector.

    In the past, a generation gap is considered to be with a span of at least 10 years. Whereas with the improvement in the technology followed by the integration of people and places across the world on account of revolutionary changes in information and communication. The entire world has become virtually a small global village. Since all organizations and people use technologies, we find that a new generation of techno-savvy people emerging in a very short span of 5 years in every sphere of activity infusing dynamism and creativity leading to several innovations.

    Globally, usage of technology is very extensive in the financial sector of which banking sector is an integral part. Indian financial sector has made rapid strides in the late 1980s and early 1990s picking up momentum with the advent of the 21st century. Liberalization of the Indian economy has provided scope to the banking sector to reorient its focus by shifting from developmental role obligated mostly by socio-political considerations into professional financial agencies keen on preserving their bottom lines. What are Nature and Characteristics of Leadership?

    The direction in which the Indian banking is moving presently indicates that the prevailing competition will lead to consolidation and convergence. Small players will either have to forge a merger to become big players or else they will be either extinguished or swallowed by larger players in the years to come. The pressure will equally be more on the existing large players to retain their lead over others. This emerging scenario warrants an innovative approach by banks to keep themselves sailing in the sea of competition.

    No wonder we find a very interesting trend in the recent past in Indian banking. The trend is the major shift from routine banking functions to a very aggressive financial marketing organization. We find most of the routines banking jobs are outsourced, thanks to automation made possible by technology. Direct selling agents are actively engaged by most of the foreign and new generation private sector banks for marketing all the banking products with specified targets.

    Therefore, the real core people who will be retained by these banks in the long run under their direct pay roles will only be experts at senior levels in marketing, corporate and retail banking specialists along with risk management professionals who will be required in view of the impending implementation of the Basle-II norms which attaches significant to assessment and management of risk factors in banking activity.

    One can visualize the following scenario in Indian banking in the next five to seven years. State bank of India and their associate banks aiming to come under one umbrella on one side followed by mergers and acquisitions taking place between few strong nationalized banks, foreign banks and new private banks on the other side. This will leave the small players and weak banks to become extinct unless they device quick strategies to become larger and stronger.

    In this context, innovation plays a very key and crucial role in the survival of the small players and also for the large players to retain their leadership amidst cutthroat competition. Out of the box, thinking is required and such thinking needs to be nurtured by the top management. ATMs of the larger banks are either fully outsourced by the individual banks or handed over to an autonomous agency by most of the banks collectively.

    Small players in ATMs are also trying to be a part of this shared network with regard to clearing operations, Reserve Bank of India has already initiated the required steps to gradually dispense with the physical presentation of cheques and replace the same with electronic clearing in major cities.

    Similarly, the audit and inspection of the computerized branches are now being done in many cases by transfer of data files to the supervisory and inspecting authorities. Qualitative inspection and supervision of the banks by Reserve Bank of India is made possible by the technology, leaving the routine audit work to the concerned internal audit departments of the individual banks.

    With the automation of the routine work process and rapid technological developments, a host of customer-friendly banking products with flexibility is now available to one and all. Few departments of the government (e.g. customs, income tax, central excise, commercial taxes, and sales tax) have already initiated the process of EDI (Electronic Data Interface) thereby reducing the manual tasks in the preparation of documentation and enhancing the levels of automation.

    This also facilitates standardization in documentation with uniformity. This will also ensure submission of such standard data in electronic form and be scanning the physical documents where required. In the long run, this enables e-commerce to gain momentum. Therefore, banks can also equally look forward to the submission of commercial documents by the trade industry through EDI in the near future.

    Once this is done, the need for the business segment to personally visit the bank branches to submit the documents will be eliminated. When ATMs on one side have reduced the depends on individuals customers on the bank branches to conduct their routine banking operations, the EDI when gains momentum will reduce the dependence of corporate customers on the bank branches in a similar fashion.

    These developments taking place mainly on account of automation will reduce the differentiation in the service delivery systems, as they are mostly standardized. Therefore, banks have to be innovative to maintain their brand values. Few banks have already started marketing aggressively for retail business loans by tying up with a select-reputed builder and conducting road shows in India and abroad to lure the salaried people and professionals.

    This role is intermediation of the banker between the builders and salaried people and professionals can be further extended to cover other areas as well. For example, banks can connect the manufacturers of goods and services with the ultimate buyers. The process is very simple. Banks are required to have a common agency with which the entire database of all the banks should be shared.

    This data should be analyzed and classified into various segments say- according to activity, age, place, income, education, etc., of the organizations and people who constitute this data. When this process is done on all India basis, a wealth of information will be available, which can be used as a marketing tool. Few relaxations in the existing banking laws are required for this purpose.

    Banks can also play an active intermediary role in connecting the organizations and people at various segments, thereby facilitating the process of movement of goods and services from the manufacturers/producers to the ultimate users (of course through other intermediaries where they are not dispensable). Banks can finance the manufacturers/producers or the ultimate users while tying up them with one another thereby increasing their lending portfolio and in the process ensuring the end use of funds.

    Collection of data from rural places is one area where banks can boast of possessing rich information, especially the public sector banks that have almost more than one-third of the network of branches located in rural areas. Banks can play a dynamic role in the delivery and purchase of consumer durables to the rural sector by using their rural database.

    Therefore, instead of acting as financing intermediaries to some of the parties in the total chain as at present, banks can bring all the parties in the chain under their ambit. Banks can thus transform themselves into aggressive marketing intermediaries from mere financial intermediaries. This innovative approach can also be used with regard to NPAs where the products manufactured by such sick or loss-making units are of good quality but the units have become sick due to financial indiscipline or mismanagement or lack of marketing skills.

    Buyers for such products can be scouted by the banks by using the above-mentioned database and in deserving cases, buyers can be given bank finance or their own merits to buy the products of sick units. A portion of the funds thus given can be again routed back into the banks for their working capital requirements.

    Similarly, banks can play an active marketing role in venture capital financing with the above modus operandi, thereby taking part in not only financing the venture capital but also in marketing functions. Microfinance is yet another area where banks can play an active role. The objective of microfinance is to deliver a wide range of financial services say, deposits, advances, insurance, and other related products to people engaged in agriculture, small enterprises and poor people in order to increase their standard of living.

    Finance is extended to SHGs or NGOs, which is basically institutional/group finance instead of lending to individual beneficiaries unlike in the case of other priority sector/rural lending. Moreover, there is no subsidies or interest concession and the basic concept in microfinance is to give timely finance to the needy people. Therefore, transaction costs are cheaper and profitability is better under microfinance when compared to the conventional rural lending.

    In view of these factors, in the long run, microfinance is likely to replace the conventional and concessional rural lending. Ample scope is available for private and foreign banks to venture into this activity due to the above-mentioned advantages. Similarly, banks in the rural sector should actively market products like Kisan Credit Cards, Forward, Futures, and Options markets of commodities.

    While Kisan Credit Cards serve as an instrument of credit, Forward, Futures and Options markets ensure a fair price to the farmers eliminating uncertainty. However, this requires an effective network that is one regulated as well as a matured financial market in rural areas for the growth and development of these products. Rural India and its economy mainly depend upon Monsoons.

    Famine and Floods both occur at the same time in the different parts of the country causing damage to the crops. Therefore, rural insurance has to be an effective tool for hedging these risk factors. The government, banks, and insurance have to together evolve more proactive and vibrant measures to deal with this issue, both at the macro and micro level.

    There is a vast untapped potential in this area and a lot of scope for developing new and innovative insurance linked financial products. Explain Dimensions of Price Perception. The merger of developmental financial institutions like ICICI and IDBI with their commercial banking wings lays emphasis on universal banking offering a wide range of financial products under one umbrella.

    Similarly, SIDBI and NABARD are having a strategic alliance with few commercial banks to expand the reach of their products and services. Banks have come to realize that it is the survival of the fittest in the competitive environment. Therefore, when necessity is the mother of invention, survival is the mother of innovation.

    Survival is the Mother of Innovation in Banking Sector
    Do Survival is the Mother of Innovation? Explanation.
  • Understanding and Learn Innovation in Indian Banking Sector!

    Understanding and Learn Innovation in Indian Banking Sector!

    Understanding and Learn Innovation at Indian Banking Sector. Innovation derives organization to grow, prosper & transform in sync with the changes in the environment, both internal & external. Banking is no exception to this. In fact, this sector has witnessed the radical transformation of late, based on many innovations in products, processes, services, systems, business models, technology, governance & regulation. A liberalized & globalized financial infrastructure has provided had provided an additional impetus to this gigantic effort. So, what we going to discuss; Understanding and Learn Innovation in Indian Banking Sector! Also learn, What is an Entrepreneur?

    Now, Understanding and Learn Innovation in Indian Banking Sector!

    The pervasive influence of information technology has revolutionaries banking. Transaction costs have crumbled & handling of astronomical brick & mortar structure has been rapidly yielding ground to click & order electronic banking with a plethora of new products. Banking has become boundary-less & virtual with a 24*7 model. Banks who strongly rely on the merits of ‘relationship was banking’ as a time-tested way of targeting & servicing clients have readily embraced Customer Relationship Management (CRM), with the sharp focus on customer centricity, facilitated by the availability of superior technology. CRM has, therefore, has become a new mantra in service management, which in both relationships based & information intensive.

    Thanks to the regulatory changes & financial innovation, large banks have now become complex organizations engaged in a wide range of activities in the US & some parts of Europe. Banking is now a one-stop provider with a high degree of competition & competence. Banking has become a part of financial services. Risk Management is no longer a mere regulatory issue. Basel-2 has accorded a primacy of place to this fascinating exercise by repositioning it as the core banking. We now see the evolution of many novel deferral products like credit risk management tool that enhances liquidity & market efficiency. Securitization is yet another example in this regard, whose strategic use has been rapidly rising globally, So is outsourcing. 

    The retail revolution with the accent on retail loans in the form of housing loans & Consumer loans literally dominating the banking globally is yet another example of product & service innovation. Various types of credit & debit cards & indeed e-cash itself, which has the potential to redefine the role of monetary authorities, are some more illustrious examples.

    Need to Push Full Throttle Ahead:

    Increasing knowledge among societies is forcing the banks to adopt international best practices to remain in business. Important dimensions of change are market, customers, competition, technology & society. Banks should focus beyond technologies and geographies to accelerate growth. Indian banking sector has adopted many dynamic innovations but still, some more are needed like risk management, e-commerce etc. The new game requires new strategies with an accent on innovational transformation. 

    Two roads diverged in a wood, and I

    Took the one less traveled by,

    And that has made all the difference.

    –  Robert Frost 

    It is Customary to describe the unfolding world as of unprecedented change, of a whirlwind of ideas, of the explosive growth of since-based technology. Prospects for continued escalation of change are awesome: the world’s knowledge-based now doubles every eight years, but by 2020, the doubling time is estimated to be slashed to 76 days. A strong momentum and apparent inevitability of globalization strongly suggest an accentuation of the pace of development. Such contextual changes records. An impetus through increasing integration of the productive process, rapid technological advances, splashing of legal & institutional barriers to global trade & a smoother flow of global capital.

    Michale E Porter demonstrated that in an industry, the nature of the competition is embodied in the treatment of new extent, the threat of substitute product or services, the bargaining power of suppliers/ buyers and the rivalry among existing competitors. The significance of introducing a steady stream of innovative products for banks emanates from its potential to salubriously impact all these factors.

    Management theories & practice are characterized by a bewildering diversity of opinions. But the view, that the challenge to innovate is urgent & continuous, enjoys a fair measure of consensus across the development spectrum. In the present world, where all elements are critically in ferment, launching of innovative products by strong business analytic tools, optimized processes & a modern centralized IT system is central to ensuring short-term survival, achieving long-term prosperity & eventually gaining competitive advantages.

    An appropriate approach to the growth matrix in an era of change, where the convergence or real & virtual worlds has become a part of our daily lives, requires a clear understanding of microeconomic framework, education & training policies, trade & competition policy & socio-economic milieu. To what extent can difference in innovation explained the observed difference in growth, profitability & financial performance of industries & even firms within the same industry? How has innovation been instrumental in influencing the Indian experience of development of banks? What lesson can be gleaned from the recent Indian experience & that of other countries? What should be the roadmap for innovation? This article attempts a brief look at some such issues of growing concerns & provides insight into the impact of the driving forces and factors, behind innovation, on Indian with particular reference to banks.

    Discontinuity: The New Disequilibria:

    Everything in business is always in flux & flow. Engel’s stressed, “equilibrium is inseparable from motion & all equilibrium is relative & temporary”. The quickening of change (Table 1), however, caused discontinuity & ripples of concern on the boardrooms. But it is necessary to realize, as powerfully argued by Gary Hamel, “We stand on the threshold of a new age – the age of revolution. For the first time in history, we can work backward from our imagination rather than forward from our past”.

    TABLE 1: DIMENSIONS OF CHANGES
       Sectors Change Impact on Business
      Markets Local to Global – Investments in Identifying

    & Servicing New markets

      Customers Acceptance to delight – Listening to Consumers.

    – Knowing &Understanding
    their needs.

     

    – Fulfilling Customer’s
    Requirements.

      Competition – Increased Competition

    – Shortage to surplus Economy

    		– Squeeze in margins leading

    to cost cuttings.
    – Consolidating &
    Convergence.

      Technology Gradual change to quantum Change – Innovational Shareholders

    Transparency.

      Society Demanding Rights – Corporate Governance

    – Concern for social
    Obligations.

           

    Historically, Changes in society have always been preceded by the flow of ideas, which provide the Cutting Edge of development. In contemplating the challenges, the approaches of those enterprises. Which successfully weathered the challenges of this volatile era. Shows that innovation is not only power but also the key to sustained economic success. While the debate over innovation in the world of business has raged for long. Innovation has now rapidly emerged as a critical lament of the growth strategy.

    Despite the multi-layered, any multi-dimensional aspect of ubiquitous change, most an organization still disconcertingly confine themselves to incremental improvement & innovation without trying to alter the rules of the game, bring about breakthrough innovation. What is prognostically alarming is that most companies in the given industry or market tend to follow. The same unwritten rules for conducting business with limited deviations from de facto strategies. This is reflected by the fact that though agglomeration & the location of innovative activities are closely related, important sectoral clusters like textiles (Tirupur), diamond-cutting (Surat), hosiery (Ludhiana), call centers (Gurgaon), auto-companies & automobiles (Chennai), with the notable exception of Bangalore (IT) are largely confined to incremental innovations.

    Apart from this, the speed of the mistake of change quickly needs to be done to make existing strategies obsolete and continuously improving. Therefore, an important policy assessment, therefore, the impetus in the banks by radical and unbalanced innovative measures for better performance in this turbulent era.

    ‘The Innovation Imperative: Accelerating Growth beyond Technologies and Geographies’

    Traditionally, innovation has been defined with the focus on traditional concepts of industry research & development & the commercialization of new products and/or process technologies. But the definition of innovation as “acceptance of & readiness to change across the organization, dedication to continuous improvement processes, willingness to experiment and explore novel ways, building new relationship & alliance, establishing new approaches to markets, channels, customers, pricing strategies & new & varied approaches to organization, measurement and performance measurement” is generally a acceptable.

    The history of the growth of financial development, as indeed of all other development, is intertwined with the growth of innovation. Compelling & incontrovertible cross-country evidence prove that successful innovation is crucial to the competitive edge of all businesses. But innovation is particularly important for banking & finance companies. Innovation, which transcends invention, represents the point of convergence of invention & insight. Organizational ethos needs to stress innovation as a key driver of growth that surprises & delights the customer with new, differentiated & relevant benefits, this is not a cliché but defining characteristics of the modern cooperate saga.

    Understanding and Learn Innovation in Indian Banking Sector
    Understanding and Learn Innovation in Indian Banking Sector!
  • Innovations of Customer Services in Indian Banking Sector!

    Innovations of Customer Services in Indian Banking Sector!

    Understanding Innovations of Customer Services in Indian Banking Sector!

    Learn, Innovations of Customer Services in Indian Banking Sector: Satisfied customers are the best guarantee for the stability and growth. Customers will satisfied only when the banks provide the customized and innovative products and services at responsible cost. This article focuses on the kind of services provided by developed countries and level of innovative services provided by Indian banks. Many innovative services are currently available from Indian banks like E-Banking, ATMs, Anywhere Banking etc., but there is a wast6 scope of improvement. Globalization, the buzzword, which engulfed all the nations of the world since the beginning of the last decade of the past millennium, did not leave the banking industry untouched. The opening of the world trade has brought out several changes in the global banking map.

    The continuing evolution of the banking and financial market has created opportunities both for providers and for users of financial products and this evolution has proven beneficial to the economy. However, innovations in financial products also have given rise to some new challenges for market participants and their supervisors in the areas of corporate governance and compliance. The changes that are taken place in the last decade demonstrate again the technical weakness and weak corporate governance at a few firms can dramatically change the cost of capital and impose an additional regulatory burden on even well-managed organizations.

    A conventional bank may treat its customer as coldly as they cash they deposits or borrow. Many banks have conveniently used control and security as reasons for their remarkable slow and impersonal services. In recent, other service industries, not able fast food an airline, has proven that customer service can a swift and enjoyable experience for both the clients and employees without sacrificing control, costs, and profits. Some banks have finally adopted these new services Paradigms, and are now branch marking with the nonbank institution to learn about their best practice.

    The growing concern about the improvement in service quality can gauges by recent news in the business standard dated June 1, 2005, where it was given that “Banks are putting their best face forward for improving service quality. While some like the Oriental Bank of Commerce has prepared a detailed dress code for their employees, others have gone a step forward and are recruiting people from the airline and hospitality industries to improve the quality of front line sales staff.”

    The major brakes in the internal controls of big corporations and institutions such as share market in the past few years. And the role of bankers has led bank regulators to change their view of bankers’ relationships with their corporate clients. Technological innovation has helped in overcoming any such problems. There was a time when we used to hear that duplicate share certificates were flooding the market and a large amount of money was being embezzled. Now with demat accounts, this risk is taken off.

    Let’s see the currently booming plastic card market. In India, the growth is not that phenomenal but among the emerging economies, India is picking well.

    Technology is rapidly transforming the banking industry- and expanding its ability to reach the unbanked. Employers in the developed countries are turning increasingly to electronic payroll cards as a cost-effective way to reduce the burden of writing and processing checks. Consumers are using their payroll cards and other versions of the prepaid debit card- also known as stored value cards- as a substitute for cash and checking accounts. Monitoring this trend, the American Bankers Association reported last December that in 2003, for the first time, electronic payments surpassed cash and cheques as consumers preferred payment method for in store purchases- an “evolution of payment behavior,” the ABA noted, “driven by the increasing popularity of debit cards.”

    In a country like America, Debit cards accounted for nearly one-third (31%) of in-store purchases in 2003, up from 21% only four years ago. Reliance on credit cards held steady during that time, at about 21%. Cash and checks, which accounted for 57% of in-store purchases in 1999, dropped to about 47% last year. In India, if we see then, people still prefer to pay by cash. The reason behind this mindset is safety for money. Still, we are far behind in terms of Internet security and E-money security.

    Coming across through the performance of Banking Institutions of the west and seeing their performance in the use of innovative methods to make themselves more customer-friendly we would have no doubts about their strong banking mail-order company L.L. Bean, know for its superb order-taking and service delivery systems, as its model for change. A major result of this functional benchmarking was the establishment of a 24-hour customer service center that can not only respond to queries and complaints but also promote and sell the bank’s products and services.

    The center even allows customers to open a checking account anytime or negotiate an overdraft at 2 am. The ATM was also reconfigured from mere cash dispenser to a versatile and tireless account executive. The machine can even buy and sell mutual funds. Inspired by LL Bean, Banks published a 50-page catalog to help customers appreciate and select from its more than 160 financial services.

    Seafirst Bank in Seattle redefined itself from a “retail bank” to a “retailer” and has benchmarked with retailers know for world-class customer service such as fast-food restaurant chains. Insider by these models, one other bank instituted a 5-minute guarantee that says, “wait any longer than 5 minutes in line and the bank guarantees $5 to your account.” Moreover, if the customer complains of any other inconvenience, he or she gets a $5 “I’m sorry coupon”. Its branch offices have official “greeters” to greet and guide customers to the right tellers or desks, much like the Guest Relation Officers (GRO) or receptionists of 5-star hotels.

    The greeter mans a kiosk at the entrance of the bank. To reinforce this service philosophy, branch managers are rated not only on sales but on service goals. Achieving or even exceeding sales targets without achieving customer satisfaction goals will not qualify a branch manager to receive the bank’s prestigious “Gold Club” award. Executives from the CEO down are encouraged and expected to visit branches regularly to monitor service and get a first-hand feel of the action. When Seafirst decides to redesign and re-layout its offices to improve services, it acquired the services of an expert from the Godfather’s Pizza chain. One result making the teller counter waist-high. It is now more open and personal than the traditional counter that is intimidating and creates a barrier between the client and the teller.

    Back offices of banks are known for the snail-paced bureaucracy that hampers front line operations and ultimate customer service. By applying the concept of “mass production”, streamlining, and standardization of tasks, Citicorp aims to remove this critical bottleneck. The bank also benchmarked with Chrysler in getting its functional departments work effectively as teams.

    Other banks in the west have sledded their conversation “finance and control” images, have likewise adopted innovative service strategies and practices. Many Banks have established an information center or “encyclopedia” in the waiting lounge. Here customers can browse through various bits and pieces of important service information like the average time to finish a transaction and the company’s products and services. Information about the busiest day or days in the branch is displayed so that the customers who want to avoid these periods may do so. Phone lines dedicated to customer service have been installed. Many Indian banks have also adopted some of these systems. Any customer can pick up this phone and relay his or her complaints, questions, or difficulties.

    The facility is designed to represent the company’s commitment to services and also serve as the customer’s last resort in case everything else fails. Similarly, modern day banks have established phone centers to accept, process, and resolve customer complaints. They also have a customer feedback program whereby whoever the customer complaints to, say a staff employee or manager, will be responsible for giving the client feedback on the status and progress of his or her complaint. The banks have customer service centers where they have created two customer flows or lines to deliver services more effectively. One was for loans and similar products that require customized and personalized services. The other was for the standard and repetitive services like deposits and withdrawals. By creating two service environments that cater to two different types of needs, service is enhanced and speeded up.

    Modern day banks have extended the concept of “Mobile Banking.” Some banks in the European and American continents have launched floating branches on boats that provide full branch bank services, to the convenience and delight of customers living in longhouses along the river banks. To further enhance service, banks have also reconfigured their Automated Teller Machines to dispense not only cash but also commodity prices and information about its products and services. The Korean Technology Banking Corporation (KTB) is setting up a Technology Financing Information Center to serve the various needs of its clients.

    Most of which are setting up joint-venture overseas. The centers will contain a huge database of information analyzed from various data from internal and external sources. By accessing this database, clients will get information about specific technologies, local information, and other data relevant to the ventures they are setting up. To facilitate processing, development financial institutions like the Industrial Development Bank of India requires borrowers to submit loan application forms in electronic floppy disks.

    Some banks and financial institutions have done such a remarkable job in improving and reinventing customer service that they themselves have become the benchmarks of other companies outside the banking sector. For instance, American Express, the credit card company, is the recognized benchmark to emulate when it comes to improving a company’s billing process. Amex’s billing is reportedly the fastest and most accurate in the world in any industry. Xerox, the benchmark for many quality practices, used the Amex model in enhancing its billing system.

    In China, the benchmark for customer service and customer courtesy is surprisingly a bank; The Industrial and Commercial Bank. Hundreds of retail shops and department stores, many of which are known for rude service, visit the bank’s branches to learn a few lessons on satisfying and delighting customers. Before sweeping changes were made, the Industrial and Commercial Bank was also known for bad service and discourteous front line employees who even swore at clients. One radical and highly effective policy it instituted was coming about with a list of words and phrases their employees were forbidden to use when dealing with customers. For instance, the popular expression, “when will you sleep complaining?” was included on the banned list. While other banks may refuse to change or accept soiled or old currency notes, the bank will replace these without question.

    Even clearinghouses have adopted the new service paradigms to support the banks’ initiatives. For instance, the Singapore clearing House Association has cut the clearing of US $ checks deposited in Singapore from two weeks to 3 days. The new system requires participating banks to open US dollar accounts with Citibank to service their respective clients.

    Innovation banking in customer service is indeed a welcome and long-awaited development. Our Article focused on the kind of services provided by the banks in the developed countries but this is not to deny the fact that the banking sector in India and other developing countries has also started doing up well in terms of providing innovative and modern day banking facilities along with good customer service. We hope that other left out banks and financial institutions will follow suit soon. Satisfied customers are the best guarantee of stability and growth. As in other service sectors, bank customers deserve the very best. In the past, banks have rarely treated customers as people, preferring to treat them as account numbers, passbooks, and loan applications. Customer service, in contrast to customer processing, is a concept whose time has come for the banking industry worldwide.

    Innovations of Customer Services in Indian Banking Sector - ilearnlot