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Despite conflicting priorities and the economic downturn, banks around the world are still increasing their investments in innovation.

These key findings are part of "Innovation in Retail Banking 2012," the fourth annual study commissioned by Infosys, a global leader in consulting and technology, and the European Financial Management Association (Efma).

The study of 300 bankers in 66 countries across Europe, the Middle East, Africa, the Asia-Pacific region, and the Americas also found that online and mobile channels are growing rapidly, with banks focused on areas of innovation that will attract new customers and grow revenues.

The findings discovered that 79% of banks see innovation as strategically important to the future success of their business while 76% said that investment in innovation in 2012 has already increased over the previous year, mostly in the areas of channels and customer experience.

It showed that bank branches receive the highest proportion of discretionary IT budget at 27%, compared to 26% for online and 20% for mobile - yet there was a consistent view across the regions that online and mobile are the most important channels for innovation.

"Ninety three percent of banks expect to offer mobile payment services and 89% plan to offer tablet banking applications to customers within the next three years.

The area of fastest growth comes from innovations in value-added services such as personalized location-based offers, a space where within three years more than 76% of banks will shift focus to, up from just 8% today."

The survey indicates that 87% of banks are focused on integration with social media, and 86% on interactive services, such as Web chat, video conferencing, and click-to-call; this highlights that banks are focused on improving the customer experience through greater interactivity.

According to Patrick Desmarès, Secretary General, Efma, this study , the fourth consecutive year they've carried it out - provides interesting insights as to how banks around the world approach innovation and where they invest their efforts.

"The growing focus on mobile devices and online innovation reinforces the rapid adoption of these channels.

By offering increased interactivity and personalization, they clearly have the potential to drive growth."

Haragopal Mangipudi, Global Head - Finacle, Infosys said "In spite of the challenging economic environment in many parts of the world and the competitive pressures on retail banks, it is very encouraging to see the recognition that innovation is essential to long-term growth.

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