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Customer-centric projects enter the Top 3 banking strategic initiatives

Customer-centric projects enter the Top 3 banking strategic initiatives

The need for new growth opportunities to sustain profit margins is compelling European financial institutions to beef up their competitiveness, an independent research company said.
"After years of IT investment focused on cost containment, European banking institutions turn the page and focus on developing new strategic applications to improve the organization's competitiveness," said Financial Insights' European Research Manager Rachel Hunt.
"New technologies are enabling banks to change their organization from product-centric to customer-centric businesses, but the real driver is the need for new growth opportunities to sustain margins."
Global independent research and advisory firm, Financial Insights, an IDC company, recently released a new report focusing on the Top 10 Strategic Initiatives in European Banking for 2007. The report builds on eight years of global top 10 analyses but focuses on the uniquely European perspectives as assessed by our regional analyst team, the company said.
As in previous years, there are perennial initiatives that were present in the top 10 last year and remain in 2007. Banking is an industry that is more about evolutionary change than seismic shifts, hence these multi-year initiatives are indicative of two truths, it noted.
"First, there are some initiatives that will never be retired -- security, fraud management and risk are part of the DNA of banking and the need to provide protection of customer assets," Financial Insights said.
Compliance is part of the cost of doing business in the heavily regulated banking industry. On the other hand, there are initiatives that will come and go, it added.
"Security, regulatory compliance, and customer-centric initiatives feature as the Top 3 trends in the European banking market taking up a significant chunk of IT budgets. A common thread is the focus on improving customer trust," said Parveen Bansal, a senior research analyst for Financial Insights in Europe, the Middle East and Africa.
The economy, consolidation, and convergence are key drivers in the strategic return to focusing on the customer to help sustain the retail bank's contributions, the report said.
"To drive retention and new customer initiatives, banks are once again investing in CRM (customer relationship management) -- new systems, modules, and upgrades -- and renewing efforts around customer data integration," according to the study.
"Some of this is related to channel integration -- the intention being to gain a consistent customer experience across channels -- but much is backbreaking work around data quality."
Investments in analytics, scoring, and modeling will also scale up accordingly, said the report.
Ensuring that IT initiatives are aligned with the business mission and continuing to leverage IT solutions to improve operational efficiency is key to succeed in the strategic goals, it continued.
Financial Insights said banks' investment decisions should fit an IT vision that could last for more than a decade.