DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 1
EXECUTIVE SUMMARY 2
Introduction 2
Retail banking: developing a distribution dynamic (Market Focus) 2
Retail banking: developing a distribution dynamic (Strategy Focus) 3
Retail banking: developing a distribution dynamic (Technology Focus) 3
Retail banking: developing a distribution dynamic (Databook) 3
RETAIL BANKING: DEVELOPING A DISTRIBUTION DYNAMIC (MARKET FOCUS) 8
Summary 8
Pressure on retail banking margins and growth prospects is growing 8
The online channel has opened up competition... 8
Income is under pressure both from increased competition and declining interest rates 9
Saturating markets are reducing growth options 9
Channels face individual challenges 10
Online banking has improved customer service, but rarely provides differentiation 10
Banks continue to work on their branch strategies 10
Contact center fatigue 11
Other channels 11
Need for a multi-channel strategy 12
Security is increasingly an issue, both externally and internally 13
Internal 13
External 14
Regulating for security 15
Regulatory compliance in retail banking 15
Channel and product regulations 16
Wider banking regulations impacting the channel 17
RETAIL BANKING: DEVELOPING A DISTRIBUTION DYNAMIC (STRATEGY FOCUS) 18
Summary 18
Developing a channel strategy will be key to the future of retail banks 18
Banks must align their business and channel strategies 19
Existing channel issues must be addressed to improve the customer experience 20
Next generation channels will enable banks to reach wider markets 20
Laptop/mobile branch banking enables banks to reach underbanked demographics 21
3rd party channels enable banks to offer products to partners' customers 22
Key channels vs. supporting channels - which channels will banks focus on? 22
How will banks deal with non-core channels? 24
Channel orchestration for a seamless customer experience and enhanced productivity 24
Physical orchestration will reduce costs and improve service 25
Decomposition of channel silos 25
Enterprise application integration 26
Business process management 26
Rules 26
Inter-channel communications will improve the customer experience and staff productivity 26
Voice and data integration 26
Online/automated channel support 27
Sales and service effectiveness in retail banking 27
Identifying customers to assess their profile and profitability 27
Improving service through channel improvements 28
Sales, cross-sales and customer retention need to be managed effectively 28
Developing a security strategy across all channels 29
Online banking security remains a key priority 29
Multi-channel security can reduce the password burden on customers 30
Internal security must be addressed to ensure accountability 30
RETAIL BANKING: DEVELOPING A DISTRIBUTION DYNAMIC (TECHNOLOGY FOCUS) 32
Summary 32
Front office - channel technologies 33
Online banking - enabling a personalized experience 34
Personalization of site content 35
Facilitate management of all products, including 3rd parties' 35
Manage online purchases to ensure compliance and allow customers to track purchases online 36
Branch banking - one size does not fit all 36
Technology investments enable banks to fit branches to their audiences 37
Investing in branch technology to improve sales, service and productivity 37
Call/contact center - improving revenue generation and service 38
Interface sales/servicing staff platforms to analytics and other channels to improve revenue generation 39
The ultimate call-center goal for banks is first call problem resolution 39
ATMs and Kiosks - self service comes of age 40
Mobile/wireless device banking - it's decision time 41
Channel intelligence 43
Banks will differ in their approaches to business intelligence 43
Channel architecture 45
Security 47
Point of access 47
Reverse authentication 49
Analytics are key to a robust security solution 49
Behavioral patterns 50
Risk rules 50
Sharing fraud data 50
Internal security 50
RETAIL BANKING: DEVELOPING A DISTRIBUTION DYNAMIC (DATABOOK) 52
Introduction 52
Definitions 52
Distribution channel IT spend in the USA 53
Distribution channel IT spend in Canada 54
Distribution channel IT spend in Europe 55
North American channel IT operations and development spend 57
European channel IT operations and development spend 58
North American analytical CRM IT spend by country 59
European analytical CRM IT spend by country 60
Branch IT spend by country 61
North American branch IT spend by source 63
European branch IT spend by source 64
North American branch IT operations and development spend 65
European branch IT operations and development spend 66
Online banking IT spend by country 67
North American online banking IT spend by source 69
European online banking IT spend by source 70
North American online banking IT operations and development spend 71
European online banking IT operations and development spend 72
North American ATM IT spend by source 73
European ATM IT spend by source 74
North American contact center IT spend by source 75
European contact center IT spend by source 76
APPENDIX 77
Further reading 77
Ask the analyst 77
List of Tables
Table 1: Definitions 52
Table 2: Distribution channel IT spend in the USA, 2005 - 2009 53
Table 3: Distribution channel IT spend in Canada, 2005 - 2009 54
Table 4: Distribution channel IT spend in Europe, 2005 - 2009 56
Table 5: Distribution channel IT operations and development spend in North America, 2005 - 2009 57
Table 6: Distribution channel IT operations and development spend in Europe, 2005 - 2009 58
Table 7: Analytical CRM IT spend in North America, 2005 - 2009 59
Table 8: Analytical CRM IT spend in Europe, 2005 - 2009 60
Table 9: Branch IT spend by country, 2005 - 2009 62
Table 10: Branch IT spend in North America, 2005 - 2009 63
Table 11: Branch IT spend in Europe, 2005 - 2009 64
Table 12: Branch IT operations and development spend in North America, 2005 - 2009 65
Table 13: Branch IT operations and development spend in Europe, 2005 - 2009 66
Table 14: Online banking IT spend by country, 2005 - 2009 68
Table 15: Online banking IT spend in North America, 2005 - 2009 69
Table 16: Online banking IT spend in Europe, 2005 - 2009 70
Table 17: Online banking IT operations and development spend in North America, 2005 - 2009 71
Table 18: Online banking IT operations and development spend in Europe, 2005 - 2009 72
Table 19: ATM IT spend in North America, 2005 - 2009 73
Table 20: ATM IT spend in Europe, 2005 - 2009 74
Table 21: Contact center IT spend in North America, 2005 - 2009 75
Table 22: Contact center IT spend in Europe, 2005 - 2009 76
List of Figures
Figure 1: European retail banks' distribution channel project priorities 11
Figure 2: Banks progression towards a predictive approach to customer service 13
Figure 3: Retail banks' top 3 IT projects for 2006 16
Figure 4: Retail banking channel options 19
Figure 5: Retail banking channel issues and strategies 20
Figure 6: Retail banking channel options 23
Figure 7: Retail banking channel options 25
Figure 8: Multi-channel architecture 33
Figure 9: European retail banks' distribution channel project priorities 34
Figure 10: Application critical success factors 43
Figure 11: The business intelligence continuum 44
Figure 12: European retail banks' architecture strategies 46
Figure 13: Factors of authentication 49
Figure 14: Distribution channel IT spend in the USA, 2005 - 2009 53
Figure 15: Distribution channel IT spend in Canada, 2005 - 2009 54
Figure 16: Distribution channel IT spend in Europe, 2005 - 2009 55
Figure 17: Distribution channel IT operations and development spend in North America, 2005 - 2009 57
Figure 18: Distribution channel IT operations and development spend in Europe, 2005 - 2009 58
Figure 19: Analytical CRM IT spend in North America, 2005 - 2009 59
Figure 20: Analytical CRM IT spend in Europe, 2005 - 2009 60
Figure 21: Branch IT spend by country, 2005 - 2009 61
Figure 22: Branch IT spend in North America, 2005 - 2009 63
Figure 23: Branch IT spend in Europe, 2005 - 2009 64
Figure 24: Branch IT operations and development spend in North America, 2005 - 2009 65
Figure 25: Branch IT operations and development spend in Europe, 2005 - 2009 66
Figure 26: Online banking IT spend by country, 2005 - 2009 67
Figure 27: Online banking IT spend in North America, 2005 - 2009 69
Figure 28: Online banking IT spend in Europe, 2005 - 2009 70
Figure 29: Online banking IT operations and development spend in North America, 2005 - 2009 71
Figure 30: Online banking IT operations and development spend in Europe, 2005 - 2009 72
Figure 31: ATM IT spend in North America, 2005 - 2009 73
Figure 32: ATM IT spend in Europe, 2005 - 2009 74
Figure 33: Contact center IT spend in North America, 2005 - 2009 75
Figure 34: Contact center IT spend in Europe, 2005 - 2009 76
