European Banks are using IT to retain their market share, rather
than help them grow their business in the future, according to
research from SAP.
The banks are allowing the credit crunch to dictate the future
and are failing to invest in technology that will help them win new
customer business, such as Web 2.0, the research concludes.
The research surveyed banks, external industry observers,
economists and academics for their views on what the next 10 years
hold for banking.
"Current investments by banks tend to be short-sighted. They are
aimed at retaining market share in the present, with a limited
long-term structure in place to grow their business," said the
survey.
The survey said that although the banks have identified new
customers that require different services, they are not investing
in the right technology to win their business. "One [group] is a
youthful niche of customers who are using new channels such as
the internet and mobile technology as their primary banking
conduits," said the survey.
Only 19% of banks said technology could help them succeed. This
is
despite banks having IT infrastructures made up of inflexible
legacy systems that are becoming expensive to maintain.
"The overall impression from this survey is that banks are not
creating their own destinies," said
Arnoud
De Meyer, director of the Judge Business School at Cambridge
University.
Ralph Silva, analyst at Towergroup, agreed. He said: "The
percentage of IT spending that is allocated towards innovative
projects has all but dried up in the banking sector."
He said banks are still spending on technology but
most of this is to upgrade existing systems, rather than to
grow their business.
"If banks are cash rich this attitude is a mistake, but if they
have cash flow problems, as most do now, they have no choice," he
said.
Silva said
Web 2.0 technology is an example of an innovative technology that
banks are not currently investing in. "The UK banks for example
are very knowledgeable about Web 2.0 but are very poor at
implementing it."
Retailers are competing with banks by offering financial
services to customers. "These organisations are absolutely
taking up Web 2.0 and are willing to spend money on it because it
supports their main businesses," said Silva.
According to the research, banks are allowing the credit crunch
to dictate the future industry. "Banks are just doing enough to
keep their heads above water. They need to start thinking more
strategically in order to take advantage of the opportunities that
are knocking on their door," said Johan Kestens, senior
vice-president, line of business financial services at SAP.
SAP said banks should make customer management an over arching
long-time focus and should integrate all the different methods it
uses to deliver services.