In 2006, market pressure increasingly aligned technology priorities to business strategy. Entering 2007, we see five main pressure points:
1. Operating margins will be under intense pressure with the rising cost of deposits and the technology investment that will be required to remain competitive over the next three years.
2. Banks have been dependent upon rate hikes to attract deposits, given the strength of the stock market. Long-term, if banks don't price deposits appropriately, relationships and potential income will be lost as customers move their deposits.
3. Solutions for small business customers will become more integrated. Traditional cash/financial management tools and payment methods integrating remote capture, lockbox, documents, electronic payments, et al, and other nontraditional financial services will be bundled and priced competitively.
4. The next level of risk-based commercial lending automation will gain momentum.
5. Look for more outsourcing of security and fraud functions to shared resources dedicated 24/7 to security. Banks will look to share the public exposure and financial risk with third parties that can better support the banks' needs.