KUALA LUMPUR (Jan 7): Retail bank IT investment in 2015 will be focused squarely on driving revenue growth, according to a new survey concluded by Australia-based independent telecom and IT analyst firm Ovum.
In a statement today, Ovum said digital channels would be at the heart of this activity, particularly as the improving economy has meant reducing costs and headcount is no longer a priority.
It said the large majority of investment made in 2015 will be focused on progressing with an omnichannel experience for customers.
According to the survery entitled ICT Enterprise Insights, 43% IT executive respondents highlighted supporting revenue growth as one of the top three strategic priorities for 2015.
“Over the past years, many banks have neglected the back office to focus on creating a strong consumer-facing platform, therefore improving the efficiency of internal business processes is a core focus for 38% of banks.
“This streamlining offers cost reduction opportunities, as well as enhanced product conversion and cross-sale rates,” said Ovum.
Ovum said that regionally, North America and North Asia were tightly focused on the consumer, while this was less of a priority in Western Europe.
It said banks in the US and Canada cited customer origination and customer experience as their two priorities.
Ovum said that in North Asia, 58% of banks hold streamlining customer application and management process as a pressing issue.
Reflecting the less positive economic outlook in Western Europe, the leading IT priority for banks in the region is simply to support revenue growth, it said.
Ovum Practice Lead, Financial Services Technology, Kieran Hines said the need to grow topline revenue through sales and customer conversion rates is driving investment into digital channels.
“Due to this, the areas that will see the greatest spending in 2015 are mobile and online banking, with 52% and 51% of banks respectively seeing their budgets grow.
“Product development will see the largest magnitude of budget increase, with over 17% of banks expecting investment to increase by more than 6%,” said Hines.
Ovum said IT investment in bank branches will see a large amount of regional difference.
It said that globally, this was the lowest investment priority with 23% of banks seeing budget reductions in 2015.
“Still, 52% of banks in North Asia and 48% of banks in North America plan to increase spending on bank branch IT.
“In contrast, in Western Europe and Latin America, IT branch investment will be decreased by 32% and 38% of banks respectively,” it said.
Ovum said a major focus of digital channel investment was enhancing the customer experience and providing greater functionality.
It said enabling greater customisation in digital channels was a top investment priority for 21% of banks, but enhancing platform functionality is the leading objective for digital channel investment.
This includes the ability to offer statement searches or to set-up payments and 53% of banks have indicated this is an investment priority, it said.
Hines added that there was a wide trend of consumerisation in the industry and retail banking is no exception.
“Users now expect and demand the same kind of rich, interactive experience they receive from the retail, media and entertainment industries in their banking platform,” said Hines.