IDC Financial Insights has released its 2014 Predictions for Worldwide Financial Services (FS) next year, with the consultancy predicting an overall IT spend next year of in excess of $430bn, reports Neil Ainger. Compliance data management will merge with analytics to deliver truly useful ‘big data’, while the omnichannel including integrated mobile offerings and core banking transformation projects, will also be front and centre (you can see this issue addressed in the series of bobsguide Q&As with core banking vendors via the highlighted links here). This blog lists IDC’s top ten 2014 tech predictions. Other 2014 predictions from Ovum can be seen here.
IDC Financial Insights has released its top ten financial technology (fintech) predictions for next year and discussed them in an online web conference entitled ‘IDC Financial Insights 2014 Predictions: Worldwide Financial Services’. The webinar featured IDC analysts such as Alex Kwiatkowski, core banking and payments/apps; Scott Lundstrom on technology transformation; and Matt Sauer on capital markets and risk technology, among others, with each identifying their prime technology trend in their area for 2014.
The intention of the list and webinar is to provide financial institutions (FIs) with a perspective on what IDC thinks will be the long-term industry trends and any new technology themes they think will pop up next year.
The 2014 top ten predictions are:
• Prediction 1: Overall IT spend in financial services (FS) will exceed $430bn in 2014 and $0.5 trillion by 2020. Consolidation and a cooling off of emerging markets will make impact, restraining growth, but not stopping it.
• Prediction 2: FIs will leverage their investments of the past three years, many regulatory-driven, to improve compliance data management and align it with new initiatives to extract additional business and operational value by deploying ‘big data’ analytics-based capabilities.
• Prediction 3: All modernization and improvement initiatives will include three components if success is to be achieved – namely, technology, people and processes. In the opinion of IDC the focus has for too long been on technology in a vacuum and this will change next year with the IT organisation itself becoming more important as the people aspect of its triumphriate is prioritised.
• Prediction 4: The most successful FIs in 2014 will be those that can deliver an enhanced omnichannel experience to their customers and prospects, using new enabling technologies, supported by appropriate business processes.
• Prediction 5: Core banking transformation projects will create opportunities for retail banks to out-innovate their peers, believes IDC, giving those who take the technology transformation plunge years of competitive advantage over rivals.
• Prediction 6: Consumers will become the disruptors in FS by minimizing their interactions with their primary FI. This will increase the use of a variety of purpose-built mobile apps, which can provide immediate and focused value.
• Prediction 7: Insurers will continue to pay close attention to the emerging market nations in developing Asia-Pacific and Latin American markets where there is aggressive growth in premiums and a need for more connectivity.
• Prediction 8: The battle for dominance on the 3rd platform will begin as firms move from ad hoc, repeatable initiatives to managed initiatives and new application mash-ups that target value creation in customer acquisition, market intelligence and operations.
• Prediction 9: Investment in risk management IT, services and skills will exceed $85bn in 2014 as FIs industrialise credit and market risk systems. Operational risk disciplines and procedures will get renewed support, under a welter of regulatory-driven changes and managers will have to learn to sell risk.
• Prediction 10: Mobile and ‘alternative’ payment take-up will remain muted in 2014 as a wide array of providers try to find a value proposition that works for both merchants and consumers.
Commenting on the 2014 predictions, Scott Lundstrom, group vice president and general manager at IDC Financial Insights, said: "As the IT organisation continues to struggle with when and where to invest in today’s technology, FIs need to balance investing in innovation and providing value for the customer, with placating the regulators."
There is certainly no doubt that regulatory-driven IT investments will continue to be made in 2014 as the post-crash rules emanating from the Pittsburgh G20 meeting in 2009 initiating the US Dodd-Frank and European Market Infrastructure Regulation (EMIR) in capital markets hit, alongside capital adequacy rules such as Basel III and Solvency II for insurers. Retail banking changes, such as the UK Current Account Switch Service, will also begin to impact the customer-facing banking environment and the increased cyber-security threat will no doubt be taken into account by technology professionals. A lot to look forward to in the new year.
By Neil Ainger