Retail banking remains trapped in the backwash of the financial crisis. Low economic growth, regulatory interference, and negative consumer sentiment are set to continue to produce a challenging operating environment in 2012?
Regulatory compliance will continue to dominate the executive agenda in 2012, with the initial deadlines for Basel III coming into view and consumer protection initiatives the order of the day. With fee income resultantly under pressure and lending growth remaining depressed, CIOs will need to balance pressure for strong cost control with requirements to support additional regulatory and compliance demands. Concurrently, consumer demands around mobile access to banking services and developments for mobile payments will create pressure to support and deliver both channel and product innovation.
The challenge is that banks must achieve this with a collection of piecemeal, stitched-together systems. CIOs must not only balance a set of opposing short- term requirements, but must also move towards a platform that will support future evolution.
Ovum’s Retail Banking research stream looks at the industry trends and drivers that influence banks’ technology strategies. Aside from general IT investment trends, our coverage includes the following topics:
Online banking has reached maturity with respect to customer penetration in most markets, but usability and functionality lags behind best practice in the online world. Banks are looking at how to transform their online platforms to act as effective sales and service platforms through the provision of additional services such as personal financial management, and are exploring how platforms should integrate and work with social media and mobile devices.
The core banking platform remains an ongoing issue for retail bank CIOs. Maintenance costs are a millstone for innovation and agility, but achieving long-term transformation is often difficult to justify given short-term business priorities. Banks need to establish a roadmap for transformation, of which selection of the appropriate core banking vendor is of critical consideration.
The new dawn of mobile payments has been promised for much of the last decade, but successful schemes have been confined to national schemes in a few Asian and African markets. The emergence of NFC-enabled smartphones has the potential to provide a renewed impetus, but the challenges of a viable business model remain.
Account opening has often been a secondary consideration in bank management. For most banks, this business process is in fact a collection of different processes, created and run independently for each channel and product type. With both compliance and operational efficiency demanding that banks tackle this situation, banks must balance the need for process optimization within the confines of organization structure and the need for flexibility.
Data protection has received increased attention from regulators, legislators, and media in recent years, with data breaches increasingly expensive from both a financial and reputation perspective. Banks need to manage requirements for greater accessibility to their systems, such as through mobile devices, with strong authentication, validation, and underlying data protection.
