Banks Must Take Advantage of Opportunities Where They Find Them

Lenders and borrowers have felt the effects as the subprime crisis has evolved into a credit crisis. The result has been strategy changes for many banks, and a greater emphasis than ever before on growing deposits. Corporate products such as cash management have become king, while lending at some institutions has come to a halt.

The financial crisis has also had an impact on IT strategies. For the largest banks, the focus will move away from new product development toward cost cutting and better risk management. New IT initiatives will be more closely scrutinized and will have to show a clear return on investment. Large banks will also move toward the creation of payments hubs and will look to deploy new lending technologies with stronger analytical tools. Now more than ever, these banks also need to start thinking about replacing their antiquated core systems with next-generation systems that promise greater efficiency and transparency, and faster speed to market. These solutions often come with high price tags, however, so replacement initiatives are not likely to be seen until bank balance sheets are more stable.

For many smaller community banks and credit unions, the financial crisis has brought new opportunities. Many are seeing double-digit growth in loan originations and an influx of deposits from consumers withdrawing money from larger institutions. Their IT priorities for 2009 will focus on technologies that generate new revenues and enable them to better compete with the larger banks. They will invest significantly in the online channel, as well as in customer analytics. They are also seeing new opportunities with small-business customers and will deploy solutions to serve those customers. Finally, smaller institutions will also be investing in lending and credit management systems.

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Increased Investment in Deposit-Gathering Initiatives in 2009, Predicts Celent
Bart Narter, SVP, Banking Group, Celent

Institutions With Capital May Find Vendors in the Mood to Deal
Jeanne Capachin, Research VP, Global Banking, Financial Insights

Firms Should Not Let Short-Term Demands Cripple Long-Term IT Strategy
Virginia Garcia, Sr. Research Director, Cross-Industry, TowerGroup