UK retail banks need to embrace IT-driven change to keep
pace with convergence and consolidation among banks
globally.
In particular, the development of the Single Euro Payments Area
(Sepa) will create new cross-border opportunities, making
pan-European acquisitions involving UK banks, such as Banco
Santander's buy-out of Abbey, all the more common.
The warning was issued by analyst group Gartner at a recent
financial services IT conference in London.
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 that too few 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
believed that their companies were pursuing a "breakaway" strategy,
aiming to invest more than rivals in systems that supported
business effectiveness.
"There is just not enough market opportunity for 46% of banks to
be successful in a 'breakaway' strategy," said Landry. "In
saturated markets, market share gain enjoyed by one bank is a loss
for others. And this does not include any of the threats from
non-traditional competitors."
The survey found that bank CIOs did expect to focus more on
global competition in the next three years. However, Gartner said
European banks should be ready for opportunities as far afield as
Asia-Pacific.
"In Asia-Pacific, IT teams need scalable architectures and the
ability to roll out new banking services at short notice as their
management aims for global expansion," it said.