UK retail banks need to embrace IT-driven change to keep
pace with global competition as convergance and consolidation in
banking continues in the years ahead.
In
particular, the development of the single European payment area
(Sepa) will create new cross-border opportunities, making
pan-European acquisitions involving UK banks, such as Banco
Santander’s buy-out of Abbey, more common.
The
warning was issued by analyst group Gartner at a recent financial
services IT conference in London.
And Sue
Landry, Gartner’s managing vice-president for the banking sector,
said that only a small minority of banks were sufficiently prepared
to drive the necessary change.
“There
is evidence that only a very few banks understand the scale of the
challenge”, she said.
“These
are the change agents, but the other 95% are still too absorbed in
milking the current cash cow and meeting short-term obligations to
shareholders or private owners.”
Landry
said there was more commitment to making necessary infrastructure
change than previously, but not enough banks were investing in
innovation.
“In the
UK and internationally there is too much optimism in the market”,
she added.
According to a Gartner survey, 46% of bank CIOs globally believe
that their companies are pursuing a ‘breakaway’ strategy, investing
more in technologies that support business effectiveness that their
competitors.
“There
is just not enough market opportunity for 46% of banks to be
successful in a ‘breakaway’ strategy. In saturated markets, market
share gain enjoyed by one bank reflects a loss for others. And this
doesn’t include any of the threats from non-traditional
competitors,” said Landry.
The
same survey found that bank CIOs do expect to focus more on global
competition in the next three years, but Gartner said European
banks should be ready to grasp opportunities as far afield as
Asia-Pacific.
“In
Asia-Pacific, IT teams need scaleable architectures and the ability
to roll out new banking services at short notice as their
management aims for global expansion,” it said.