Banking Industry predicts Q4 2004 upturn

30 June 2003 – ‘The outlook for financial markets in 2003 remains bleak,’ claim UK-based IT managers and consultants at a recent industry event. A poll, conducted by Eurobase Banking Solutions, found that although seventy-three percent (73%) of the survey population did not expect any sort of recovery this year, many (67%) are looking forward to a more buoyant business climate towards the end of 2004.

The survey, which obtained the views IT and business managers within the financial sector, shows that with over seventy-seven percent (77%), cost-reduction continues to rank highest on the board agenda. Although banks are keen to reduce costs many (70%) are preparing for an eventual upturn and are planning on investing in IT over the next six months.

Fifty percent (50%) of the survey participants predicted that the bulk of that investment will be placed within the front office, while forty-three percent (43%) claimed they will most likely allocate resources to the middle office. Although only seven percent (7%) plan to dedicate spending towards the back office, STP was declared the most essential ingredient to gaining a competitive edge in today’s environment by forty percent (40%) of the respondents.

The type of technology they would ideally invest in to handle their operational needs varied but most of the respondents (63%) claimed they would prefer an off-the-shelf solution which could then be tailored to their specific needs and managed internally rather than developing an in-house system (17%) or outsourcing the activity to an external service provider (20%).

Even though thirty percent (30%) stated they were driven to invest in new technology by the opportunity to reduce the bank’s cost base, few were tempted by the benefits associated with outsourcing. Thirty-six percent stated their technology purchases were driven by hopes of increased efficiency and productivity (36%). Respondents stated that by rationalising the number of systems in-house (47%) and sharing application development with partner institutions (33%), banks can realise their ideal - cost reduction.

David Mallinder, Head of Business Development and Sales at Eurobase comments, ''The majority of banks and financial institutions are developing strategies to cut costs but at the same time increase operational efficiency and productivity. They recognise that by evaluating their existing infrastructure with a view to replacing existing systems with more cost effective products that offer greater functionality, improved STP capability, and easily customisable technology, these objectives can be achieved. This underpins Eurobase's recent experience where demonstrating return on investment has proven key to securing new business opportunities.''