Banks and financial services companies need to use IT to
promote innovation rather than focusing
on cutting costs, according to analyst group
Gartner.
Gartner research vice-president,
Peter Redshaw,
said innovation is essential to firms as they prepare for recovery.
However, many firms are too focused on the short-term goals of
surviving the downturn, he said
(see video).
"It has been a tumultuous year for banks and financial services
providers and some will continue to face a rocky path for the next
two years ," Peter Redshaw said.
"
IT departments have been fighting frantically to help keep their
organisations' heads above water and they'd be forgiven for
thinking that the worst is over. That may be true but it is no time
to relax."
Redshaw warned that financial services companies should start
thinking of IT as a way to introduce innovative services and to
retain customers, rather than simply to cut costs.
"Banks are becoming excessively risk-averse and that could
generate a culture that is too introverted and too inflexible. That
in turn leads them to think of IT as something that is only
suitable and only fit to reduce costs," he said. "That is a
problem. It means that tactics start to dominate over
strategies."
"They are spending so much about automation, about streamlining
their processes, that they have no time left to focus on their
strategic goals," he said.
Banks and financial services companeis must start by making
radical changes to their IT governance and the way their IT
organisation is structured, said Redshaw.
"You have got to start thinking about how you win back the trust
and confidence of your customers and IT has a really big part to
play in that."
"It needs quite a critical shift in thinking and attitude,
investments and plans, to change from this introverted, back office
type mentality to be much outward focused on what can we do to
raise more revenue, to get more stuff to customers, to retain
customers."
"At some point your CEO will be bringing you a new operating
model. The world is going to change. We are not going back to the
go-go years of 2006 and 2007. It's going to be a world of small
margins, low growth, high volitility and heavy regulation. You need
to be prepared for that."
e_SBlt Research by Gartner from May 2009, with 92 executives at
banks worldwide, showed that the most important innovation goals
were to improve product or service quality, to extend a product
range, to replace products and services, to comply with regulations
and to protect market share.
But only 30 per cent of financial services companies in North
America, 53 per cent in APAC and 66 per cent in Europe have
established a formal innovation process.
Peter Redshaw, Gartner, discusses
the challenges facing Financial Services Providers