the state of european banking key it challenges in 2005 it banking 2005 paris, tuesday 15 february...
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The State of European BankingKey IT Challenges in 2005
IT Banking 2005Paris, Tuesday 15 February 2005
Bob GiffordsDirector, EMEA Research & Consulting
© Financial Insights, an IDC Company, 2005, All Rights Reserved
Europe in Transition 2005
Rightward shift: New Accession States have moved the centre of gravity eastwards
Regional, European Focus: for economies of scale
Record bank profits but competition is fierce & strong € slows growth
Regulation fatigue Roll out of: IFRS, Basel II/
RBCD, Chip & PIN, SEPA, FSAP, etc.
© Financial Insights, an IDC Company, 2005, All Rights Reserved
3 key European Themes
Re-integratingthe Enterprise
Re-integratingthe Enterprise
Industrialisingthe Value Chain
Industrialisingthe Value Chain
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GlobalTop 10Issues
GlobalTop 10Issues
Competitive marketplace still drives leaders
© Financial Insights, an IDC Company, 2005, All Rights Reserved
Re-integrating the Enterprise Customer relationships fragmented
– by multi-channel delivery & – diminishing share of wallet through competitive direct
banking services– mobile customers are hard to serve
Governance is fragmented by silo based core banking systems, frequent mergers/ acquisitions, & new regulatory demands
Payments are fragmented by new types of e-money and alternative payment/ clearing networks
Securities processing is fragmented by multiple pools of liquidity, new derivative asset types, and real time arbitrage opportunities
IT Infrastructure is fragmented by variety of platforms, architectures, & standards
© Financial Insights, an IDC Company, 2005, All Rights Reserved
Industrialisation of the Value Chain
Car / Airline Industry = Mature Focus on core competencies Many business models:
Shared services, classic outsourcing, joint ventures
Business drives component IT/ e-services
Database driven supply chain management & deep integration
Factory + service mentality
Financial Services = Not mature Vertically integrated, in-house
processes Captive IT utilities for industry
association or in-house IT IT still fairly monolithic with
legacy systems Relationship management of
internal resources and service contracts
Customer relationship focus
Outsourcing 20-30%Outsourcing 20-30%
In house value Creation 70-80%
In house value Creation 70-80%
Outsourcing 70%Outsourcing 70%
In house value Creation 30%
In house value Creation 30%
© Financial Insights, an IDC Company, 2005, All Rights Reserved
Automating Content Management
Active Documents:Wrapped in XML, XBRL etc.
AutomatedWork Flows
Databases Documents
Integration
XML / EDIPaperless Office:Document Image
© Financial Insights, an IDC Company, 2005, All Rights Reserved
Future Outlook for Agile Bankers:Global Top 10 Issues 2005
Dynamic IT & Infrastructure Profitability & Performance Management Regulatory Compliance & Risk Management Developing new IT enabled Revenue Sources Enterprise Payments Security & Fraud Management Integrated Multichannel Delivery Systems Selective Sourcing Core Banking Transformation Intelligent Interaction Management
© Financial Insights, an IDC Company, 2005, All Rights Reserved
1 Dynamic IT & Infrastructure
Responsiveness to Market
Operational Efficiency
Business Strategy Automation and Execution
IT Operations Automation and Management
Service-Oriented Architecture
Variable Pricing Model
Virtualised Resources
Standards-based Components
End-to-End, Dynamic Management
Flexible Sourcing Model
End-to-End Design and Management
© Financial Insights, an IDC Company, 2005, All Rights Reserved
2 Profitability & Performance Management: Balanced Scorecards
Human CapitalHuman Capital
CustomersCustomers
FinanceFinance
TechnologyTechnology
Business
Processes
Business
Processes
Invest & allocate risk capital
Build & operate
&
Satisfy/ delightGenerate
profits
Stakeholder
Values
Stakeholder
Values
Comply
Attract, retain
Constrain
© Financial Insights, an IDC Company, 2005, All Rights Reserved
3 Regulatory Compliance & Risk Management
EU regulatorsSEPA, 42 FSAP initiatives, etc.
Sarbanes-Oxley,
Patriot Act
IAS / IFRS
International Accounting Standards
Basel II
FATF Money Laundering
Major pressure on enterprise data infrastructure, analytic engines, and reporting tools/processes
‘Spitzer Effect’‘Spitzer Effect’ ‘Parmalat’‘Parmalat’
Compliance and regulations have top share of mind
© Financial Insights, an IDC Company, 2005, All Rights Reserved
4 Developing new IT enabled Revenue Sources From price sensitive commodities to value added
differentiation Fast time to market (weeks not months/ years) Leveraging
– advanced business intelligence, market research & profitability analysis
– parameterised Product Factories – customer centric Fee Repositories
Focus on– Deep supply chain integration for corporates– Holistic private client services
No new killer apps
© Financial Insights, an IDC Company, 2005, All Rights Reserved
5 Enterprise Payments
Banking
Insurance
Investments
Teller WAPInternetKioskATMIVRCall CenterAdvisory PDAPFM
DeliveryChannels
PROCESS MANAGEMENT
Optimized Routing
Performance Mgt
LiquidityManagement
ANALYTICS & KNOWLEDGEFraud
Anti-MoneyLaundering
Operational Risk
CustomerProfile/ Policy
CreditRisk
ControlCommon Payment Services
Risk & Authorizations
DocumentImage
Alerts &Notifications
Authori-zations
Payment Methods
ACH EBA RTGS CLS Cheque Clearing Visa/MC ePayment Proc
Third Party Services
Credit Ratings
Demographics
Market Data
Presentation Formatting
Business LogicGateway Management
Connectivity
SharedDeliveryStack
Shared Delivery Stack
Source: Financial Insights
Product Factory
Performance Management
© Financial Insights, an IDC Company, 2005, All Rights Reserved
6 Security & Fraud Management
Identity theft (Phishing), First Party Credit Fraud, Virus attacks, Denial of service, etc. all growing
Technology solutions, processes & policies all need to evolve with criminal skill levels
Enterprise level visibility & command & control2 Factor authentication & digital signaturesForensic security tools and techniques are
important for tracking
© Financial Insights, an IDC Company, 2005, All Rights Reserved
7 Integrated Multi-channel Delivery Systems
Source: Financial Insights
CoreSystems
CoreSystems
CoreSystems
Banking Insurance CoreSystems
CoreSystems
CoreSystems
Investments CoreSystems
CoreSystems
CoreSystems
Back End Product Factory Systems
Knowledge
Interaction
Customer
Knowledge Factories
Shared DeliveryInfrastructure
Presentation
Content Transactions
Business Rules Business Objects
Mes
sag
ing
Teller WAPInternetKioskATMIVRCall CenterAdvisory PDAPFM
DeliveryChannels
Web & Internet Connectivity
Connectivity
Touch point performance management
© Financial Insights, an IDC Company, 2005, All Rights Reserved
8 Selective Sourcing
Turn fixed into variable Costs & reduce them Increase range of Skills on Demand Transformation of the IT Infrastructure Increase Service Levels 24x7 Support Pan European / Global Operations Moves to Selective Sourcing
– ASPs for cards, payments, mortgages, fund management, web hosting, etc.
– Leverage best practice and market knowledge– Offshoring for certain BPO– Insourcing to create economies of scale & revenue to fund in-house
development
© Financial Insights, an IDC Company, 2005, All Rights Reserved
9 Core Banking Transformation
Web services will dominate here too Business Process and Content Management are
critical features Component based application services with real time
database updates must integrate with delivery channels, payments, governance & other services
Parameter driven product factory & customer based fee repositories
Banking Insurance CoreSystems
CoreSystems
CoreSystems
Investments CoreSystems
CoreSystems
CoreSystems
Product Factory Systems
CoreSystems
CoreSystems
CoreSystems
© Financial Insights, an IDC Company, 2005, All Rights Reserved
10 Intelligent Interaction Management
Customer - Centric
Sales & Service
Business Intelligence
Collaboration
Customer
Business Process
Multi -ChannelDelivery
• History, Analytics
• Pattern Recognition • Mgmt Reporting• Dynamic Marketing
• CustomerPreferences
• Data Access• Case Management• Account/Service
Management
• Authentication• Service Enrollment• Event Definition• Exception Management• Straight -Through Processing
• Channel Integration• Authentication/Security• Intelligent Routing• Audit & Delivery
Logistics
Data
Management
© Financial Insights, an IDC Company, 2005, All Rights Reserved
Essential Guidance
Think “Enterprise Architectures”Think “eCollaboration”Think “Data-driven Marketing”Think “Factory Mentality”Think “Performance tied to value proposition”Think “Dynamic IT”
And work progressively towards strategic goals
© Financial Insights, an IDC Company, 2005, All Rights Reserved
Questions
Bob GiffordsDirectorEMEA Research & Development
Financial InsightsIDC United Kingdom, British Standards House389 Chiswick High RoadLondon, W4 [email protected]
+44 208 987 7100