Best Practices in Financial Services Technology

Effective vendor strategies, opportunities and pitfalls

Publication Date	September 2006
Publisher	Business Insights
Product Type	Report
Pages	137
ISBN Number	not applicable
Product Code	RBI00123

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Summary

The financial services sector is still the one industry that vendors recognise as offering lucrative returns  two of the three largest software vendors (SAP and Oracle) have been heavily targeting this area in recent years  however, it is also one of the hardest to break into for outsiders.

Best Practices in Financial Services Technology is a new management report that provides best practice advice and vital insight into the retail banking, insurance and financial markets sectors across Europe and North America. It also provides an in-depth analysis into IT spending by sub-sector.

Develop your market presence, strategic planning and go-to-market approach for higher profitability, using the in-depth analysis in this report.

Hot issues covered in this report...

Balance future growth with short-term efficiencies  the end of cost restructuring projects, the intensification of competition and the increasing need to achieve operational efficiency.
Core systems renewal  the replacement of core systems, investments in re-engineering and the replacement cycle.
Standardisation  customers' use of the different channels available and the multi-channel strategy.
Compliance drivers  'compliance fatigue' amongst organizations, regulatory activity, and regulatory initiatives such as MiFID in Europe and Reg NMS in the US.
Hedge funds  formulation and execution of investment strategies.
Outsourcing  cost cutting, transformation and growth enablement.

This new report will enable you to...

Gain in-depth market insight using this report's analysis of the retail banking, insurance and financial market sectors.
Determine your go-to-market strategy based on this report's assessment of the financial service institutions' priorities IT spending results and predictions across retail banking, insurance and financial markets.
Talk the language of financial services institutions when presenting your technology solutions using the analysis of the value and volume sizing for select IT markets in Europe and North America contained in this report.
Identify where partnerships and relationships with systems integrators can benefit your business objectives by reviewing the best practice advice and guidance for IT vendors targeting the market included in this report.
Increase market share by identifying where the major growth opportunities lie through this report's examination of external factors impacting IT spending and the drivers and inhibitors to IT investment.

Key questions answered in this report

What are the main challenges facing financial services institutions?
Which areas of IT are financial services institutions investing in?
What's driving core systems investment?
Are financial services institutions interested in outsourcing?
What regulatory pressures do financial services institutions face?
How are insurers modernising their policy administration systems?
What do banks want their core systems architecture to look like in thefuture?
What opportunities do hedge funds offer technology vendors?

Content

Executive Summary
- Market outlook
- Balance future growth with short-term efficiencies
- Focus on business goals, not technology
- Encourage standardization
- Avoid a 'big bang' approach
- Compliance is still a top priority
- Exploit new market opportunities
- Create infrastructure efficiencies
Chapter 1 Introduction
- What is this report about?
- Who is this report for?
- Definitions
- Tiers
- Regulations affecting financial services institutions
- Basel II
- Capital Requirements Directive (CRD)
- IFRS/IAS
- MiFID
- Regulation NMS
- Sarbanes-Oxley
- Banking terms
- Core systems
- Financial markets terms
- Policy administration
- Hedge fund
- Assets under management
- Insurance terms
- Policy acquisition
- Policy administration
- Policy processing (Life) claims processing (non-Life)
- Policy processing (Life)
Chapter 2 Market outlook
- Summary
- Introduction
- Retail banking
- Europe
- North America
- Insurance
- Financial markets
Chapter 3 Balance future growth with short term efficiencies
- Summary
- Introduction
- Case in point: core systems renewal in retail banking
- What are core systems?
- Banks' core systems strategies
- Drivers behind investment in core systems platforms
- Core systems technology
- Architecture standardization  the rise of the integration layer
- Wrapping the core systems as temporary relief for core system pain points
- Re-engineering core systems for greater componentization
- Service-Oriented Architecture  the next big leap towards process excellence
- Event Driven Architecture  a step ahead of Service-Oriented Architecture
Chapter 4 Focus on business goals, not technology
- Summary
- Introduction
- Case in point: financial services investment in contact centers
- Overview
- Background
- Productivity and profitability
- Outbound services
- Compliance
- Key tactics to maximize a go-to-market strategy
Chapter 5 Encourage standardization
- Summary
- Introduction
- Case in point: multi-channel distribution in retail banking
- Importance of channel strategy
- Need for a multi-channel strategy
- Delivering multi-channel distribution
- Security is increasingly an issue
- Channel orchestration for a seamless customer experience
- Decomposition of channel silos
- Channel architecture
Chapter 6 Avoid a 'big bang' approach
- Summary
- Introduction
- Case in point: IT investment strategies in insurance
- IT spending outlook
- IT objectives
- Legacy system investment remains key challenge
- Claims remains the focus in Non-life
- Policy administration
Chapter 7 Compliance is still a top priority
- Summary
- Introduction
- Data management
- Information lifecycle management
- Email management
- Security
- Case in point: growth of legislation affecting insurers
- US insurers
- European insurers
Chapter 8 Exploit new market opportunities
- Summary
- Introduction
- Case in point: hedge funds
- Business issues for hedge funds
- Hedge funds are beginning to focus on cost control and competitive pressures
- Corporate governance is a growing concern as investor base expands
- Competition sparks increased capability demands on service providers
- Technology opportunities
- Rationalization of a hedge fund manager's desktop
- Pressure to improve trade and portfolio analytics
- Improvement in execution quality
- Integrating execution management into order management
- Prime brokers must focus on robust operational technology solutions
- Opportunity for vendors to service larger funds
- Institutional clients drive customizable reporting functionality
- Consolidated views in demand
Chapter 9 Create infrastructure efficiencies
- Summary
- Introduction
- Case in point: outsourcing in insurance
- Outsourcing spend
- Network outsourcing
- Desktop outsourcing
- Datacenter outsourcing
- Application services outsourcing
- Business process outsourcing
- Global sourcing
- Index
List of Figures
- Figure 3.1: Application architecture view of generalized integrated core system
- Figure 3.2: Business environment for core system strategy
- Figure 3.3: Benefits of real-time processing
- Figure 3.4: Core systems development trajectory in retail banking industry
- Figure 3.5: Process-centric service-oriented architecture within retail banking institutions
- Figure 4.6: Financial service agent positions
- Figure 5.7: European retail banks' distribution channel project priorities
- Figure 5.8: Banks' progression towards a predictive approach to customer service
- Figure 5.9: Multi-channel architecture
- Figure 6.10: Drivers dictate IT mindset
- Figure 6.11: Differing approaches to systems simplification
- Figure 6.12: Critical strategic drivers and implications in policy administration systems
- Figure 7.13: Regulatory IT spend is more focused on the Patriot Act, Basel II and SOX in 2006
- Figure 7.14: Regulatory compliance IT spend (Europe) 2005  2009
- Figure 7.15: Summary of regulation affecting L&P insurers
- Figure 8.16: Hedge fund strategies have outperformed the market over the last few years
- Figure 8.17: European Hedge Fund Industry IT spend 2005-2009
- Figure 8.18: A hedge fund's investment cycle
- Figure 9.19: How are your IT and outsourcing budgets changing from 05 to 06?
- Figure 9.20: Interest remains relatively high, but no individual service is universally accepted across the sector
- Figure 9.21: What are the benefits of business process outsourcing?
- Figure 9.22: 1) What is your current strategy with regards to offshoring and 2) are you increasing your use of offshore in 2006?
List of Tables
- Table 4.1: Contact center IT spend in North America, 2005  2009
- Table 4.2: Contact center IT spend in Europe, 2005  2009
- Table 9.3: Infrastructure outsourcing by line of business, 2002-2008
- Table 9.4: The changing face of offshore outsourcing