Digital channels expand as banks chase top line growth: Ovum
As priorities shift from cost containment to growth, digital channels are at the heart of retail banking plans to drive revenue, according to a new survey by Ovum.
“The need to grow topline revenue through sales and customer conversion rates is driving investment into digital channels,” says Kieran Hines, Practice Lead, Financial Services Technology, Ovum.
“Due to this, the areas that will see the greatest spending in 2015 are mobile and online banking, with 52 per cent and 51 per cent of banks respectively seeing their budgets grow. Product development will see the largest magnitude of budget increase, with over 17 per cent of banks expecting investment to increase by more than 6 per cent.”
Ovum reasons that with an improving economy the need to reduce costs and headcount has fallen as a priority. Instead, they say, the large majority of investment made in 2015 will be focused on progressing with an omnichannel experience for customers.
Across the senior IT executive respondents in Ovum’s ICT Enterprise Insights survey, 43 per cent highlighted supporting revenue growth as one of the top three strategic priorities for 2015, according to the researchers.
However, they suggest that as many banks neglected the back office to focus on creating a strong consumer-facing platform, improving the efficiency of internal business processes remains a core focus. “This streamlining offers cost reduction opportunities, as well as enhanced product conversion and cross-sale rates,” Ovum says.
According to Ovum North America and North Asian banks are tightly focused on the consumer, but Western Europeans less so. Reflecting the less positive economic outlook in Western Europe, the leading IT priority for banks in the region is simply to support revenue growth.
Branching out, and in
“IT investment in bank branches will see a large amount of regional difference. Globally, this is the lowest investment priority with 23% of banks seeing budget reductions in 2015. Still, 52% of banks in North Asia and 48% of banks in North America plan to increase spending on bank branch IT.” They contrast this with Western Europe and Latin America, where IT branch investment will decrease by 32 per cent and 38per cent of banks respectively
Hines says, “There is a wide trend of consumerisation in the industry and retail banking is no exception. Users now expect and demand the same kind of rich, interactive experience they receive from the retail, media and entertainment industries in their banking platform.”