The optimal development strategy for banks is to move to a component-based architecture that spans the entire distribution channel framework. This will involve re-engineering existing monolithic channel applications to enable greater componentization and re-use across multiple systems. This will enable banks to realize more value from technologies and move towards process excellence.
The technology focus areas include:
– Web content management solutions to push out tailored, dynamic content for customers and help ensure point of sale compliance;
– Analytical CRM tools to assist in customer profiling;
– Personalization technologies to develop a more targeted service for distinct customer groups.
The Internet is becoming an increasingly effective revenue generation tool, although its exact role in distribution strategy will depend on the strategic focus of the bank. Adopting a scenario-based approach to eBanking service design will be crucial in the realization of strategic objectives.
Italy and Scandinavia to see rapid growth
Datamonitor expects spend on eBanking technologies to grow from $2.2 billion in 2004 to $3 billion in 2008. Italy and the Nordics are set to be the fastest-growth opportunities to 2008.
While the UK will be the largest single eBanking market to 2008, growth will be slower as many banks have already made significant investments in refreshing eBanking platforms.
Spend in Benelux, Spain and Switzerland will be driven by a few innovative banks, such as Bankinter in Spain and ING in the Netherlands. Most of these banks have already invested in second-generation platforms and eBanking spend is therefore more likely to be incremental than transformational.
Growth in France and Germany is pegged to be slower than other countries, due to the continued importance of other channels such as Minitel (France) and an ongoing focus in IT cost control (Germany), which has resulted in little strategic IT spend being allocated for new development initiatives.
Challenges for eBanking application vendors
Vendors without a component-based solution will face a challenging growth outlook, particularly those that offer solutions that only offer internet-specific solutions that are unable to be integrated effectively into the other channels. As such, it is critical that vendor applications offer a high degree of componentization to enable cost-effective re-use across multiple channel systems.
Enabling cross-channel process orchestration as well as basic data integration across channels is emerging as a major vendor selection criterion. This will become even more critical as banks seek to migrate towards service-oriented architectures.
Proven implementation capability and reference sites are core to establishing credibility. Although banks have become more receptive to vendor solutions, an ongoing challenge for eBanking application providers is establishing strong reference sites in leading European banks.
Moving towards a genuinely process-centric multi-channel architecture will be the foremost area of technology investment for banks. This in turn will enable them to be more effective in leveraging key Internet tools such as web content management, analytics and personalization. Given the ongoing importance of multi-channel distribution and integration to European retail banks, it will be important for vendors to continue to demonstrate that they have the capability to deliver a single, integrated delivery platform across all channels as well as rich functionality for the Internet channel.
