The banking industry was subject to unprecedented turmoil in 2006. The rapid progression of fraud schemes, regulatory initiatives, margin and cost pressures, customers' demands, and the overall pace of change in technology inundated business and technology management in the global banking industry over the year.
The bad news is that bankers are challenged as never before to respond quickly, despite limited budgets to accommodate these changes. The good news (for some) is that these challenges are setting up a clear playing field upon which the winners will be separated from the losers more so than at any time in the past decade. Some of the more critical and far-reaching priorities bank technology and business leaders will need to address in 2007 are outlined below.
Fraud-Detection and Security Technologies
Banks that have not yet addressed the need for multifactor authentication will have that at the top of their technology priority lists in 2007. They will need to take a more comprehensive view of the mechanisms used to steal confidential information and utilize it for fraudulent purposes. Business process management, event-detection and alert technologies all will play a role in monitoring potential fraudulent activities, notifying legitimate customers of these activities and taking immediate action to prevent fraudsters from succeeding.
Analytics for Marketing, Risk & Business Performance
Banks today need to improve their abilities to respond to customers, regulators and shifts in the general economy. Such ability rests in part on the development of contextual awareness; that is, what is happening now, why is it happening, what could this event mean and what should we do about it? Banks will continue to invest meaningful sums in analytic technologies that help drive marketing and sales effectiveness, monitor risks of all types and assess the performance of business activities. Areas of note include:
- Decisioning analytics for improved credit underwriting.
- Predictive analytic tools that drive more-targeted sales and marketing initiatives.,
- Optimization tools for improved pricing and packaging.
SOA exploration -- ranging from "skunkworks" projects to formal architectural plan development -- will continue in 2007 at large banks around the globe. Ultimately, SOA will sail (or flounder) based not on banks' abilities to manage complex technology, but rather, success will be determined on issues of governance and business management.
On the Brink
The banking industry is on the cusp of transformation. Globalization will provide access to, and influence from, huge populations in India, China and elsewhere. Rapid technology advances combined with the emergence of post-baby boom populations will change the way corporations, individuals and employees interact with banks. And security-related regulations will increase the urgency for banks to stay off the front page. Institutions that are able to accommodate these trends through technology and operations restructuring will have true competitive advantage.