The innovation orientation at banks has ramped up significantly in the short time since the first quarter, according to our new State of Banking Innovation market survey for the third quarter.

Answers to open-ended questions from the survey are presented here.

According to the data, culled this month and released today, the percentage of FIs with dedicated innovation teams increased 720 basis points to 64% this quarter compared to the first quarter of 2013. That increase resulted in a major shift downward in “corporate bureaucracy” as an impediment to innovation, the data shows. New ideas seem also to be in richer supply at banks today, according to the data.

The newly crowned “greatest impediment to innovation at your company today”: budget. According to the data, 31.6% of respondents cited budget as the greatest impediment to innovation today, up from 17.6% in the first quarter.

In order to understand whether bankers are meeting the innovation needs of consumers, we asked the bankers two crucial questions: 1) on which area of innovation their company is spending the most money today; and 2) which area of innovation is most valuable to consumers today. What we found was that while spending on mobile banking technology, for example, is substantial (31.6% of responses on areas of innovation on which budget is allocated), that spend falls short of the perceived value to consumers, according to bankers. To wit, 43.4% of respondents said mobile banking innovation was “most valuable to consumers.” Now, we understand that “spending” and “most valuable” cannot necessarily be an apples-to-apples comparison, but as an indicator, the discrepancy in responses deserves notice.

On the other hand, the percentage of respondents saying that they are spending the most on online banking innovation jumped 980 basis points to 23.7%, even as the share of those saying online banking innovation was “most valuable to consumers” fell 530 basis points to 11.8%.

Overall, spending appears to be on the rise for innovations related to mobile banking and online banking, while on decline for

• Tablets;
• Payments;
• Channel Integration;
• Social Network Banking;
• Analytics; and
• Shopping/Rewards.

Meanwhile, the follow avenues of innovation are perceived by bankers to be less valuable today than in the first quarter:

• Online Banking;
• Tablets;
• Channel Integration;
• Social Network Banking;
• Analytics; and
• Shopping/Rewards.