Rami Olwan

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Banks Need IT Innovation for Growth

Half of the banking sector worldwide will still lack a formal IT budget and innovation programme by 2013 restricting future growth potential.

“Pressure from governments, regulators and consumers is making some banks risk-averse and creating a culture of introversion and inflexibility,” said Richard De Lotto, Principal Research Analyst at Gartner. “The predominant view of IT is that it is only useful for cutting costs, so tactical thinking about automation and rationalisation overwhelms longer-term decision and strategic plans and goals.”

Non-banking competitors┬ásuch as retailers, online companies and telecommunications companies – are making inroads into the banking industry, leading the way with customer-oriented service improvements that customers will seek as the economies of access improve.

Meanwhile, bank fees will rise to help offset customer attrition. Gartner recommends that banking and investment services focus on innovation initiatives and service improvements, as opposed to pure product development and ensure that personalisation is a critical component of innovation initiatives.

In the banking segment, peer to peer (P2P) lending will gain focus as consumers who lose their jobs cannot get loans to cover periods of unemployment; businesses that encounter trouble due to low demand cannot get credit lines to see them through to recovery.

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