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Moving away from cost cutting, retail banks increase IT spending
as they focus on customer satisfaction and revenue growth.
R
etail banks across the globe will see IT spending
grow 3.4%, reaching US$118.6 billion in 2013, as
chief information officers (CIO) focus on customer
satisfaction and revenue growth. This is according to
global industry analysts Ovum.
Ovum finds that European banks are lagging behind their North
American and Asia-Pacific counterparts, with just 1.8% growth
expected, compared to 3.3% and 5.1%, respectively.
In a new Business Trends report, Ovum suggests that within
Europe, the optimistic shift towards greater IT spending signals a
reduction of the cost-cutting measures seen previously by the global
banking industry. Instead, a focus on digital channels, such as online
and mobile banking, and digital marketing activities, will enable
them to improve customer satisfaction and revenue growth strategies
and fuel cross-selling and upselling opportunities in the short and
mid-term.
Among the digital channels, mobile banking is the clear IT
investment priority in 2013, as retail banks attempt to capitalise on the
features unique to mobile, such as location-based services. Ovum’s
forecasts show the Other Channels category, which includes mobile
banking, will grow 4% in Europe in 2013, and rise at a compound
annual growth rate of 6% between 2013 and 2017. Overall, spending
on online channels in this region (including traditional online banking
services and mobile-browser-based banking services) is set to grow
4.2% in 2013. In parallel, to compete in the digital world, a number
of retail banks will shift their “bricks and mortar” marketing
activities online.
Elsewhere, Ovum’s Business Trends report reveals that credit
risk management and data privacy will become key regulatory
compliance drivers of IT spending in 2013, with global investment
into Management Information Systems predicted to reach
$6,4 billion over the course of the year, and $2.2 billion of spending
in Europe alone over this year. This accounts for 5.5% of overall IT
spending by European banks.
‘The optimistic signs on the economic horizon are driving the
shift away from cost-cutting and towards investment strategies
within the retail banking sector,’ comments Jaroslaw Knapik, senior
analyst, Financial Services Technology at Ovum. ‘Whilst regulatory
compliance has certainly fuelled a significant amount of the
investment predicted in our forecasts, it is by no means the sole driver.
The level of investment in digital channels gives a clear indication
that banks are fully cognisant of the growing expectations of their
customers, as well as the opportunities they present.’
INFOSYS: BANKING TRENDS FOR 2013
Analytics gets real time, and mobility is a priority: banks will
combine existing and real-time information of a customer,
transaction and product to integrate it with applications like
location-based services.
The core evolves from transaction to intelligence:
Transaction history will emerge as a way to identify new
product/service requirements or push contextual offers.
Socialising pays off with a new revenue stream: social
media goes from customer care to new selling opportunities
– powered by peer recommendations, personalised services,
and co-creation of products.
Banker, retailer, telco, technologist: banks go from
collaboration to co-creation, with new services and
products that combine offerings from banking and nonbanking entities.
Edition 5
BANKER SA
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