The Bank Technology Hot List: Solutions That Sizzle
Patrick Moore, SVP, Director of Treasury Management, Fifth Third Bank
Although the current demand for mobile financial applications is limited to niche market segments, we anticipate greater interest from the commercial marketplace in conjunction with the growth of virtual, more-mobile work teams in 2010. As treasury clients seek a wider range of access when it comes to conducting transactions and obtaining account information, mobile technologies will become more prevalent. Large financial institutions have already expanded their mobile offerings to include payment initiation, transaction verification and access to balance information. Improved security will create a higher comfort level for customers around mobile banking, paving the way for more-widespread commercial adoption of sophisticated applications. Treasury professionals will increasingly leverage the expanding capabilities of mobile devices, taking advantage of a powerful electronic wallet that will deliver a complete range of bank services.
The Appeal of Variable-Cost Models
Jim Eckenrode, Research Executive for Banking, TowerGroup
The hot "technologies" are in the areas of sourcing and analytics. Banks will continue to be pressured to reduce expenses, and any opportunity to shift to a variable-cost model in either technology or business process outsourcing will receive great attention. At the same time a select minority of banks are looking to press their advantage, and will turn to business partners to help them develop industry-leading products and services using that same variable-cost model. Many business applications within banking are candidates for alternative hosting models -- namely, software as a service (SaaS). This is particularly important in areas that have complexity in process or compliance requirements, such as payments processing or mortgage lending. Transforming outdated infrastructures in these areas is a necessity, and SaaS-based solutions can be part of a larger migration path.
In terms of analytics, banks are groaning under the weight of ever-increasing data volumes. Combined with increased demand from regulators and customers for greater transparency, control and relevance, banks must increase their investments in analytics in 2010. Analytics will be used in many ways: to improve risk management and compliance and in the lending area -- both for more-data-intensive originations processes and in default management and collections, as well as in the product development and servicing parts of the business. The need for greater ability to develop new products and offer those products to prospects at the right time and place is increasing as regulation threatens to reduce banks' traditional sources of income.
Falk Rieker, VP of Banking Solutions, SAP America
Banks are reconciling the sources and the scope of their data in an effort to deliver a single trusted enterprise view of their business. The lack of an enterprise scope in previous systems helped create the crisis of confidence that occurred when portfolios could not be priced across siloed systems. With the crisis came the realization that point solutions that do not speak to each other create data integrity issues. The key for banks in 2010 is data integration. Future systems must be based on SOA-compliant modules with common data aggregation and integration capabilities. Every number must be auditable to the source, and every calculation must be arrived at transparently. Customers and regulators will demand it. As such, in 2010 we'll see a demand increase for systems that deliver finance transformation, analysis and a common modular infrastructure.
Christine Barry, Research Director, Aite Group
Banks will continue to focus on the customer experience in order to strengthen relationships. Aite Group expects to see a greater incorporation of Web 2.0 and interactive technologies for customer portals and online banking. This not only will lead to a more customer-driven experience but will also enable banks to add customer forums and educational tools to position themselves as more than transaction providers. Banks will test the waters with social networking in an effort to appeal to younger consumers and remain top of mind with existing customers. For example, Twitter will be used to alert customers to the length of lines at branches.
Technologies for the small business will continue to be added. As remote deposit is increasingly adopted, mobile capture will enable the small business user (and individual consumer) to take pictures of checks with mobile devices and send them electronically to their banks for deposit. Enhanced online banking tools to help manage cash more effectively also will be important additions.
Finally, in the wake of a disastrous year and a half, banks realize the need to enhance fraud prevention, risk management and credit tools. This will allow them to evaluate the creditworthiness of new borrowers and, more important, measure existing portfolio risk and better forecast future defaults through predictive analytics.
Forecast: Increasing Clouds
Sherrie Littlejohn, EVP - Enterprise Technology Architecture and Planning, Wells Fargo
Realizing the value of virtualization and Web 2.0 is a journey that will continue for some time. Mobility applications will be an area of continued interest, building on the desire for easy, quick and accessible solutions. And cloud computing will continue to generate a buzz, though large companies are likely to continue to be challenged by data protection concerns. That said, private clouds may well be of great interest. Private clouds also support greener data centers and bring potential cost efficiencies.
Ongoing feature development and maturity of systems management tools also are of key interest to increase adoption rates of virtualization and usage of private clouds. Virtualization is one way to get closer to green data centers while promoting increased computing utilization and operational efficiencies. However, different and possibly more-complex management structures and security will need to be integral complementary efforts. A key enabler to lowering the barrier to entry for cloud usage will be advances in identity and access management technologies that support role-based access control and entitlements.
In addition business intelligence, data semantic technologies, and search and e-discovery capabilities are likely to be of great value as banks seek to learn more about customers' behavior, business trends and risk management. Business intelligence helps us better understand our customers' objectives and can create opportunities for banks to cross-sell products and services. Data semantic (DS) capabilities also provide common views of the customer while reducing the time to integrate and the associated costs. Search and e-discovery capabilities will enable users to locate pertinent data and content quickly.
Collaboration Gets Real
Haragopal Mangipudi, Global Head, Finacle & Mohit Joshi, Global Head of Sales & Marketing - Banking & Capital Markets, Infosys
Technologies that are changing the ways people and organizations communicate will ring in changes in 2010. Businesses will become more social, using collaborative technologies such as Twitter, blogs and other interactive networking tools. The convenience, speed, reach and lower cost will not only make these channels more attractive but also drive innovation and creativity. Banks will use collaborative technologies to work with partners, customers, competition, regulators and other stakeholders. These technologies can be used to educate and empower customers, staff and partners. Collaborative technologies will extend reach, enable innovative communication and help banks respond to rapidly changing demands.
Also, green IT and mobility are up-and-coming technology initiatives that can provide a significant competitive advantage. Encompassing consolidation of data centers along with the various virtualization options, green IT can be an effective way to slash operating expenditures and increase efficiency. Virtualization, in particular, has tremendous cost-saving potential. Forward-thinking banks view mobile as another opportunity to connect with consumers.
Avivah Litan, Distinguished Analyst, Gartner
Some of the hottest technologies for 2010 will include entity profiling, typically for customers and employees but also for other entities (e.g., ATM machines); social network analysis that looks at linkages and relationships between people, groups of people and other entities; and smartphone browsing.
Banks will use customer profiling and social network analysis for fraud detection, marketing, customer acquisition and customer retention. Self-learning and self-updating profiles keep track of an entity's behavior, establishing a baseline of "normal" behavior for that entity. Banks can use these profiles to detect abnormal transactions, indicating fraud, or to tailor marketing of products and services to customers according to their preferences. Social network analytics also can help banks sell more products and services.
Finally, smartphone mobile browsing will continue to gain adoption. Banks will have to adapt their Web services to fit the smaller footprint of mobile browsers, and they will also need to find new ways to authenticate customers that work with the mobile browsers and smartphones. They will also take advantage of location services enabled by mobile browsing -- for example, banks will give smartphone users graphical directions to the nearest ATM.
Mobile Payments Gain Traction
Diarmuid Mallon, Senior Manager, Product Marketing, mCommerce, Sybase 365
Despite the financial turmoil in 2009, we saw an uptake in mobile financial services all over the world -- from simple mobile banking services such as alerts and notifications to end-to-end mobile commerce solutions. 2010 will see a continued rise in mobile financial services initiatives globally and in the U.S. in particular, specifically with an increasing focus on mobile payments. Financial institutions need to revamp their mobile banking strategies to move away from siloed mobile banking solutions to broader banking solutions that include mobile payments, which will drive additional revenues, cost benefits and customer loyalty, in addition to being a defensive move against new payment entrants to the industry. Mobile payment will continue to become more prevalent, including person-to-person payment in the U.S. The challenge remains: Who will enable mobile payments first -- the financial institutions or new payment entrants?
Bruce Livesay, CIO, First Horizon National
The hottest technologies for 2010 will fall into four categories:
- PAYMENTS PRODUCT INNOVATION. The combination of unprecedented litigation-driven regulatory change and the emergence of social banking will force banks to react with creative payment solutions. Institutions with flexible payment hub architectures and foundational mobile solutions already in production will be best positioned to respond with new payment product innovations and services. Additional services such as peer-to-peer lending and savings, mobile device remote deposit capture and the mobile wallet will drive new sources of revenue.
- CHANNEL DELIVERY INTEGRATION. Seamless delivery of bank products and services across all channels, including the branch, will be an important technology investment area in 2010.
- ENTERPRISE RISK MANAGEMENT AND ASSET QUALITY. Bank failures will continue in 2010, and those institutions with mature credit valuation models will be in a position to take advantage of resulting opportunities. Technologies in the space of credit analysis and financial reporting will be important as banks work with the FDIC to manage loss-sharing agreements. In addition, future repayment modeling will become a critical capability for identifying lending opportunities and simultaneously reducing credit risk.
- SERVICE MANAGEMENT AND COST OPTIMIZATION. Continued budgetary restraints will push bank IT shops to focus on simultaneously improving service delivery and reducing operating costs. Virtualization will continue into 2010 as bank IT groups work to streamline both branch and data center operations and to reduce costs and improve reliability. Banks will start leveraging both private and public clouds for development and test activities as the paradigm matures.
Integrating the Experience
Paul Sussman, President, First Manhattan Consulting Group
First Manhattan Consulting Group sees a great deal of business interest in three technology areas:
- CHANNEL CAPABILITIES that give customers more control over their money, such as personal financial management, money movement and real-time alerts.
- ENTERPRISE CUSTOMER DATA SOLUTIONS that support decision making (for dynamic pricing, risk underwriting, customer retention, etc.) and improved service (total customer view, case management, etc.).
- BUSINESS PROCESS MANAGEMENT combined with e-signature to enable online account opening, "once and done" servicing, faster time to market and increased business focus from IT groups.
Banks will use these technologies to integrate processes and data across products and channels, resulting in a more consistent customer experience, improved sales, reduced account attrition and lower costs.