What innovations can happen in the banking space?

I think in future, banking sector will look into "Banking through social networking", which provides convenience, less risky and multi level marketing banking resolving the problems with expanding banks to remote locations and simultaneously providing loans to small business through networking. In these cases, Banks gets its commission from all parties involved; whereas risk for the lender reduces. This kind of banking has already started in India but still, it is running in a very small but I believe, in future, it will have a big impact on the market

I thing mBanking can become a very good innovation tool for the banking industry in the future. The phone will become your wallet ( contactless payments), your branch (for deposit) and your credit card. This could fit it into a social-media culture and for SMEs etc.customers across investing, insurance and banking can use mobile app, which also facilitates on-phone trading, filing claims for auto accidents, loan calculations and the usual access to account information.

Imagine this - You log into a site of a bank and are greeted by a virtual RM he functions exactly as a normal Service RM, if u have any basic operational function required such as debit card tracking, cheque book request, address change updation request etc all these are tracked by the VRM(Virtual Relationship manager), your account is mapped to only a particular RM and that module is tracked for everything from courteous service to TAT. If a product is to be purchased the VRM can compare the options, evaluate and suitability with the customer needs and list out top 3 options, the balance closure work and explanation of the product can be then processed by the RM who physically interacts with the client and supports closure. This does sound  a bit far fetched right now but with the advancements in the Artiifcal intelligence technology this can become a reality.

Banking innovations would be directed towards more efficient utilisation of IT infrastructure.The e banking with virtual money would reduce the need for physical cash transactions.Also, branch banking would be replaced by one stop shopping retail outlet for financial services like insurance, mutual funds etc.,

Similar to number portability in Telecom, a customer should be able to switch between banks based on service/costing/other criteria. Whetehr it is CASA or loans etc, he should be able to transfer all his relationships and get the best deal. This will increase the competition among banks and take customer service levels to the next level.

Microfinance is the provision of financial services to low-income clients, including consumers and the self employed, who traditionally lack access to banking and related services. More broadly, it is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers." Those who promote microfinance generally believe that such access will help poor people out of poverty.

Microcredit is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.

Microcredit is a financial innovation that is generally considered to have originated with the Grameen Bank in Bangladesh. In that country, it has successfully enabled extremely impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty.[citation needed] Due to the success of microcredit, many in the traditional banking industry have begun to realize that these microcredit borrowers should more correctly be categorized as pre-bankable; thus, microcredit is increasingly gaining credibility[citation needed] in the mainstream finance industry, and many traditional large finance organizations are contemplating microcredit projects as a source of future growth, even though almost everyone in larger development organizations discounted the likelihood of success of microcredit when it was begun. The United Nations declared 2005 the International Year of Microcredit.