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3 Hot Banking Markets Beyond the Obvious

When it comes to identifying potential geographic markets for growth and investment, banks have been focusing on the prominent BRIC nations: Brazil, Russia, India and China. While these four countries are attractive to financial services organizations seeking new opportunities to grow, global financial services growth opportunities need not be limited to the BRICs. BS&T explores growth beyond the BRICs, with snapshots of other hot banking markets in Latin America, Hong Kong and South Korea

3. Central and Eastern European Banks Invest in IT to Improve Data Management, Customer Service

Although momentum in Central and Eastern Europe (CEE) has slowed due to the continuing financial crisis, banks in emerging areas of the CEE region still managed to realize some growth over the past couple of years, and they will continue to see growth in the near future, according to Vienna-based Raiffeisen Research's CEE Banking Sector Report. The report, which was published in October 2011, indicates that the long-term growth outlook for the banking sector in the CEE is strongest in six markets in particular: Russia, Poland, the Czech Republic, Romania, Slovakia and Albania. These six areas are likely to remain high-growth markets in which loan and asset growth is likely to outpace growth in gross domestic product (GDP), said Raiffeisen Research, which is a division of Raiffeisen Bank International Group (Vienna).

In order to keep up with the growth and stay competitive, banks in the CEE are making major technology investments to modernize infrastructure, streamline operations and keep up with innovations in digital channels. According to London-based analyst firm Ovum, IT spending for retail banks in the CEE region will increase 21 percent and reach $3.6 billion by 2015.

Late in 2011, Armonk, N.Y.-based IBM announced several contracts with banks in CEE countries that are good examples of such technology investments:

  • Raiffeisen Bank Romania recently signed a contract with IBM for a new IT infrastructure that will help the institution rethink business processes and improve operational efficiency. According to the Bucharest-based arm of Raiffeisen Bank International (about US$4.4 billion in assets), the investment is part of its effort to increase its competitive advantage and improve customer service.
  • Central and Eastern Europe
  • In Poland, IBM is providing Warsaw-based PKO Bank Polski (US$56 billion in assets), the oldest and largest bank in the country, with four zEnterprise mainframe servers to help improve the performance and efficiency of the bank's systems and improve customer service. The bank also is using IBM software to help integrate critical business processes and improve data management.
  • In the Ukraine, IBM signed a five-year agreement with Kiev-based Pravex Bank, which has more than a million customers in the country, to provide technology and facility management services for the bank's new data center in Kiev. The goal of the deal is to help automate banking processes, improve customer service, and support the rollout of online and mobile banking services, according to IBM. More recently, one of the country's biggest banks, Kiev-based PJSC Ukrsotsbank (US$5 billion in assets), signed a 10-year agreement to outsource its IT systems and processes to IBM.
  • In Russia, IBM was involved in designing and launching a new software architecture at Moscow-based Sberbank (US$293 billion in assets), the country's largest lender. The new system integrated the bank's IT infrastructure to enable faster decision making and better data management, as well as unify delivery through different channels and reduce credit risk, according to a news release announcing the deal. --Olivia LaBarre

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