A Look into Banking Trends for 2006

For over a couple decades, IT has been an integral part of a financial institution's competitive advantage. Throughout the 1990s, efficiency and cost-cutting were the primary objectives of IT. Thanks to relatively strong performance during the economic downturn, banks have been able to increasingly apply a strategic approach to their IT decisioning process. Consequently, in the IT ROI equation, revenue enhancement will be gaining equal weight to cost-cutting.

The Branch Renaissance Continues:

More banks are recognizing that the branch is still the cornerstone of retail banking. As banks focus their efforts on growing revenues through sales of more complex higher-margin services and products, they are finding that the branch is the most effective delivery channel. The direct personal interaction provided at the branch creates the best environment for selling these products.

Multi-channel Integration Is Moving off the Drawing Board:

Multi-channel integration is garnering the attention of a growing number of banks. Although it is far from becoming a mainstream exercise, it is moving away from the early-adopter phase to being a feasible initiative for most banks to undertake. The question is not if but when.

Improvements in Internet Banking Will Forge Ahead :

Banks are increasingly convinced that Internet banking's ROI can extend beyond simple cost-to-serve equations and direct revenue models. Driven by enhancements in Internet banking's user-friendliness, Internet banking's ROI now encompasses generating revenues indirectly by improving customer satisfaction with Internet banking, which in turn, has proven to translate into greater customer retention and higher balances.

Automation of the Loan Process Will Expand:

As interest rates inch up, banks are scrambling to develop marketing and IT strategies geared towards maintaining strong growth in originations. Next-generation solutions will provide users with greater work process automation capabilities and better integration with third parties, thereby eliminating many of the manual processes still in place today.

Small Business Need Not Be the Underserved:

Until recently, small businesses have been chronically underserved by banks. The classic example is the application of a retail Internet banking solution to serve these businesses, which has been the leading cause of low adoption to date. Banks, however, are increasingly recognizing they could garner a larger share of small businesses' financial services spending if they implement appropriate technology.

Cash Management Will Jump on the Browser Bandwagon:

While most banks already have large corporate banking solutions in place, a large number of transactions are still being completed on Windows-based solutions. Many banks have announced plans to migrate all of their customers over to browser-based solutions now that full functionality is available through this channel.