2013 Trends To Look Out For: Banking And Financial Services
By Charles F. Moreira
Now that the 21st of December 2012 came and went and life goes on, we consult some informed seers on what the information and communications technology (ICT) industry can expect in the year ahead.
Starting with the banking and financial services sector, Rik Turner, Ovum senior analyst for Financial Markets Technology enterprise and organisational users of ICT being more risk-averse in 2013, due to a combination of a depressed world economy; the volatility caused by an uncertain recovery, especially in Europe; and tougher regulation causing leading companies and financial markets being cautious and less willing to take business risks.
The sell side will prioritise improvement in the bottom line over growth in the top, focus on product accounting for more complex, multi-asset strategies to try and compensate compensate for the lack of margin in cash equities.
The buy side is aware that investors are becoming less faithful as they seek better returns, so will invest to shore up assets under management with improved client servicing, providing an overall better customer experience in the hope of keeping their business.
Meanwhile, regulatory compliance will place further IT investment requirements on market participants this year and risk analytics, covering market, credit, operational, and a new dimension, liquidity risk, will be key and companies will harness in-memory capabilities to handle the kinds of volumes of data at the speeds required for intra-day risk management and reporting.
The buy side will focus on client servicing, make reports on how portfolios are performing more transparent, frequent, and readily accessible, with major efforts to enable access from mobile devices, for instance.
In an effort to drive cost out of its business, the sell side will increase the automation and optimise post-trade operations, with cloud services becoming a serious option for a number of functions.
*Compliance and risk are driving investment on the buy and sell side.
*Client servicing is a top priority for the buy side as investor returns wane.
*The buy side is investing in the front office to reduce dependence on brokers.
*Product accounting underscores multi-asset strategies for the sell side.
Retail banking technology
Ovum’s Denise Montgomery sees retail banks remaining torn between the opposing pressures of cost reduction and the need to invest in innovation. Slowing economies, market uncertainty, cost and regulatory pressures resulting in narrower margins, causing retail banks worldwide to find ways to increase productivity.
Balanced against this cost pressure is the need for banks to invest in capability to better position themselves in the face of the sweeping wave of digital and social changes.
Retail banks face digital disruption head on, so efficiency and productivity will be paramount in 2013, but innovation and transformation will be key drivers. Overall, retail banking is grappling with how to define its role and shape in the coming digital, mobile, social, and data-driven age.
Banks, if not polarised in their views, tend to see themselves as either technology companies that do banking functions or as financial advisors. This positioning, in turn, shapes business and technology strategies.
In either case, investment in innovation is required, be it innovation to meet the larger disruptions of the digital age or more incremental innovation to improve process efficiency and customer experience. While banks display continued uncertainty as to where to invest, 2013 will see many begin to cement their strategies. In most cases, strategies will be finalized in the next 12 to 24
*The consumer driven digital economy and mobile revolution create disruption and the need to invest in innovation.
*Mobile payments solutions will continue to evolve and enter the market in earnest.
*Customer experience enhancements will focus on creating seamless cross-channel experience, incorporating digital communication driven by targeted analytics.
*Data, information, and analytics will improve decision making as Big Data continues its march
to centre stage.
*Cross-enterprise process efficiencies will entail building or extending online banking capabilities and resolving strategies around real-time core banking platforms where these have not been replaced.
Ovum’s Barry Rabkin, Charles Juniper and Denise Montgomery believe the year 2013 will seem depressingly similar to 2012 for the insurance industry, as the same economic issues in 2012 will persist into 2013.
Efforts to keep the eurozone together will continue, as will protests in the streets, volatile financial markets, high unemployment rates and low growth rates in the developed world.
However, two bright spots for insurers will be continuing growth of the middle class cohort in the emerging economies who will need various types of insurance, and the continued economic growth in the Asia Pacific, though it will be dampened by global events.
“In brief, the 2013 economy will be a difficult environment to generate profitable growth,” they said.
Ovum believes that in 2013, the various economic, finance, market, and technology forces will all come together to pressure the insurance industry to manage four major business trends which together impact producers such as insurance agents, brokers, or financial advisors, as well as customers, and regulators, and in doing so, the competitive success of the insurance company itself.
There will be a strengthening of channel management; making better decisions through analytics; optimising policy administration, billing, and claim management; and remaining in regulatory compliance.
Technology has always played a major role to play in the insurance industry. Insurers know full well that other than their personnel, the entire essence of their company is information capture, storage, and use.
However, too many insurers are primarily focused on using technology to keep the company running but that philosophy will not work in 2013.
Insurers will obviously need to continue to use technology to run the company but insurers will also have to become more skilled, and dare we say innovative, at: adapting mobile solutions, using analytics well beyond basic analytics, considering the growing variety of options on the sourcing palette to optimise core administration systems, and creating an enterprise risk management system that is near real-time, accessible, and auditable.
*Insurers will need to strengthen and expand channel management.
*Insurers will need to make better decisions using advanced analytics.
*Optimising core administration systems will become table stakes.
*Remaining in regulatory compliance becomes a more pressing issue.
Other trend reports:
* Big Data
You must be logged in to post a comment.
There are no commentsAdd yours