ICT Opportunities in European Financial Services

Investment drivers, targeting strategies and the leading players

Publication Date	September 2005
Publisher	Business Insights
Product Type	Report
Pages	157
ISBN Number	not applicable
Product Code	RBI00090

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Summary

The global economic downturn and equity market decline since the late 1990s badly affected the entire financial services industry and resulted in dramatic cuts in IT spending. Since then, as markets have stabilized, more balanced strategies focusing on cost containment and efficiency maximization have emerged. However, each financial services sub-sector differs from another and vendors need to understand their dynamics in order to target them successfully. This new technology report that assesses the key ICT investment drivers in retail banking, insurance and financial markets sectors. The report contains a detailed examination of key market issues including operational risk, compliance, rationalisation and revenue generation. It also evaluates the profiles of leading technology vendors in each market, the market opportunities for vendors and recommends key action points for growth.

Content

Executive Summary
- Market context
- Operational risk and compliance
- Retail banking
- Insurance
- Financial markets
- Outsourcing
- Vendors to watch
- Chapter 1 Introduction
- What is this report about?
- Who is the target reader?
- Definitions
- eBanking
- Branch renewal
- Outsourcing
Chapter 2 Market context
- Summary
- Introduction
- Retail banking
- Branch renewal
- eBanking
- Insurance
- Financial markets
Chapter 3 Operational risk and compliance
- Summary
- Introduction
- Business drivers
- Europe operational risk spending
- What stage have FSIs reached?
- Target ICT framework for enterprise operational risk management
- Action points for financial institutions
- Adopt frameworks for identification, measurement and communication of risk
- Emphasize indicators that are predictive, not just historical
- Watch out for cascading and correlative scenarios
- Action points for vendors
- Opportunities where institutions put the risk intelligence infrastructure in place
- Workflow-enabled applications and BPM software
- Integration of operational, market and credit risk
- Software implementation projects and change initiatives
- Basel II
- Investment in Basel II
- Positioning Basel II offerings
- Assist FSIs in creating effective risk management lifecycles
- Target a client's specific needs
- Sarbanes-Oxley (SOX)
- European spend on SOX
- Other operational risk legislation
- Sector-specific trends
- Retail banking
- Point of Sale regulation
- Insurance
- Solvency 2
- Financial markets
- Money laundering and market abuse
- Other regulations
Chapter 4 Retail banking
- Summary
- Introduction
- Market conditions
- M&A activity
- ICT spending priorities
- Cost-driven strategies
- Improve process efficiency
- Architecture standardization
- Core systems strategy
- Revenue-growth strategies
- Multi-channel integration
- Branch renewal
- Technology implications
- Self-service devices
- Retail banking trends
- Bancassurance
- eBanking
- Technology implications
- Vendor strategies
- Commission and incentive management
- Technology implications
- Vendor recommendations
- Choosing software
Chapter 5 Insurance
- Summary
- Introduction
- Market conditions
- M&A update
- Tax changes to address pension 'crisis'
- Ripples from the US
- Distribution dynamics
- Life distribution
- Non-life distribution
- Changing nature of distribution
- Technology implications
- ICT spending priorities
- Infrastructure efficiency
- Trends in European insurance
- Policy administration
- Technology implications
- Vendor recommendations
- Regional variations
- Closed book aggregation
Chapter 6 Financial markets
- Summary
- Introduction
- Market conditions
- ICT spending priorities
- Sub-sector spending plans
- Business drivers
- Regulation and political developments in the EU
- Cost control
- Search for growth in higher-margin activities
- Innovation and growth in complex derivatives products
- Data management
- The return of STP, but not as we know it
- Multi-product back-office operations
- Back-office restructuring
- Strategic implications for institutions
- Stronger integrated risk management
- Streamline the product manufacturing process
- Component-based approaches
- Technology choices
- Infrastructure investment
- Enterprise applications
- Outsourcing
- Trends in financial markets
- Program and algorithmic trading soars
- Hedge funds continue to grow
- Technology implications
- Hedge fund service provision
- Future technology vendor opportunities
- Asset management enters its mature phase
- Retail asset management
- Institutional asset management
- Technology implications
- Payments processing
Chapter 7 Outsourcing
- Summary
- Introduction
- Market conditions
- Future trends
- Application outsourcing
- Changing deal structures
- Moving to critical systems
- Business process outsourcing (BPO)
- The three basic value propositions of BPO
- 'Outsource the problem'
- 'Solve the problem, then outsource'
- 'Solve the problem, then in-source'
- Technology implications
- Vertical BPO
- The vertical credibility challenge
- Examining the vertical BPO markets
- Vendors giving value add
- Horizontal BPO
- Spotting the opportunity
- Offshore horizontal BPO services
- Offshore outsourcing
- Drivers of global sourcing
- Vendors establish global/international fulfillment models
- Vendors have increasing sector expertise
- Core vertical FS processes are increasingly starting to be offshored
- Offshore markets and operating models are maturing
- Future outlook
- Service line take-up
- Developing a global sourcing strategy
- Sector trends
- Retail banking
- Insurance
- Financial markets
- Vendor strategies
- Deal terminations
Chapter 8 Vendors to watch
- Summary
- Retail banking
- Branch renewal
- eBanking
- eBanking and channel applications
- Niche application providers
- Business transformation players set for important role
- Commission and incentive management
- Insurance
- Insurance distribution
- Financial markets
- Strategic implications for vendors
- Increasing pressures to create cross-asset capability
- Risk management specialists face mounting pressures
- Exceptions management functionality will be 'bundled'
- Asset management vendors
- Asset management back-office outsourcing
- Outsourcing
- Infrastructure outsourcing
- Application outsourcing
- Business process outsourcing
- Offshore outsourcing vendors
- Vertical BPO
- Generalist outsourcers
- Specialist outsourcers
- FSI in-sourcers
- Index
List of Figures
- Figure 3.1: Operational risk management lifecycle
- Figure 4.2: The 'branch blueprint'
- Figure 4.3: At what stage are you in branch renewal?
- Figure 4.4: Process-centric multichannel architecture
- Figure 4.5: A target compensation framework
- Figure 5.6: The Internet is the most popular area of distribution channel investment
- Figure 5.7: The one-to-many back-office
- Figure 6.8: Key drivers of IT strategy in European financial markets
- Figure 6.9: Componentization in the middle and back office
- Figure 6.10: Hedge funds rely more on outsourced technology than traditional asset managers
- Figure 7.11: Offshore BPO maturity model
- Figure 8.12: eBanking technology vendor 'stack' (featuring selected vendors)
- Figure 8.13: The vendor landscape relevant to insurance distribution
- Figure 8.14: Vendor offering matrix
- Figure 8.15: The vertical BPO vendor landscape in European FS
List of Tables
- Table 4.1: Recent large M&A deals
- Table 4.2: Recent investments in bandwidth-intensive advisor applications
- Table 4.3: The Internet is an increasingly effective revenue generation tool
- Table 7.4: Summary of recent outsourcing deals
- Table 7.5: Outsourcing deal terminations