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Understanding the Growth Opportunities in Russian and CIS Banking (Strategic Focus)

Published by: Datamonitor

Published: Oct. 5, 2009 - 35 Pages


Table of Contents


Overview
Catalyst
Summary
Key Messages
The CIS banking sector represents one of the highest revenue growth potentials worldwide
The political and economic turmoil triggered a strong wave of reforms
Major strategic transformation is on CIOs' agendas
The transformation will rely heavily on technology
Foreign technology vendors should form delivery partnerships with local IT services firms
Balanced focus on solutions that address cost reductions and revenue growth is needed
Table of Contents
Table of figures
Market Opportunity
The CIS needs to be recognized as one broad market with Moscow as the financial capital
Economic growth in the CIS is expected to accelerate in 2011
The CIS banking sector has one of the highest revenue growth potentials worldwide
A crisis in the banking sector exposed many institutional weaknesses
A wave of consolidation is approaching
Reformation is needed
There is still plenty of room for growth
Business Strategy Overview and Technology Implications
The financial crisis forces banks to cope with new challenges
Inefficient utilization of distribution networks and customer bases
Questionable quality of service (inheritance of the bureaucratic communist system)
Levels of productivity far below the Western standards
Underperforming risk management processes
Post-communist corporate cultures
Major strategic transformation on the agenda
Customer-centricity
Consolidation and centralization of functions
Risk management
The transformation will rely heavily on technology
The demand for technology is on the rise, driven by a major overhaul of core systems
Compliance and integration requires IT investments into back- and middle-office platforms
The payment business needs the technology to tackle fraud
Technology spending to grow at a healthy CAGR 8.3% (2008-2013)
Growing need for IT talent to support the transformation
Technology Market Overview
Compliance with local accounting standards have driven the emergence of local banking platforms
Growing significance of specialized payment technology vendors
Card payment technology is expected to be in strong demand
The financial crisis has highlighted underperforming data management practices
Focus on sales optimization requires specialized technologies
Branch technology needed to drive productivity and servicing
Online banking is an opportunity for smaller or specialized banks
Contact centers will remain an important remote channel, particularly for mid-tier banks
ATM investment on hold until 2010
The product vendor landscape remains largely dominated by local vendors
IT services increasingly targeted by foreign vendors
Go to Market
Foreign vendors should form delivery partnerships with local firms
Foreign vendors should focus on acquisitions to gain presence
Local support is a core requirement
A balanced focus on cost reduction and revenue growth is needed
Banks primarily focus on the price and strength of offerings when selecting a vendor
APPENDIX
Definitions
Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
List of Figures
Figure 1: The Commonwealth of Independent States
Figure 2: GDP growth projections through 2014, constant prices through 2014
Figure 3: Russia is expected to be among the fastest growing banking markets in terms of revenues
Figure 4: The Russian and CIS markets promise high profits from banking in long-term
Figure 5: RUB-USD exchange rate development
Figure 6: Overdue loans/total loans in the Russian banking sector
Figure 7: The funding gap significantly increased in the Russian financial sector
Figure 8: Russian banking system pre-tax income
Figure 9: Profit forecast for 2009 in the Russian banking sector
Figure 10: Dynamics of household insurable deposits in Russia and Ukraine, 2000-2008
Figure 11: Retail Banking technology CAGR through 2013, geographical view
Figure 12: Retail banking technology spending through 2013, business function view
Figure 13: The centralized settlement structure of the Russian payment system
Figure 14: Credit card market growth projections
Figure 15: VTB Bank's more rigorous approach to risk management and risk monitoring
Figure 16: The branch network of Sberbank, the largest bank in the CIS
Figure 17: Selected product vendors with footprint in the CIS banking sector
Figure 18: Selected IT services companies active in the CIS banking sector

Abstract

Introduction

Up until the start of the current financial crisis, the retail banking market in the Commonwealth of Independent States (CIS) was undergoing a period of rapid transformation, as banks developed new products, services and channels. The sudden shock caused banks to change their priorities. The crisis is likely to significantly change both short- and potentially long-term IT priorities.

Scope
  • The Commonwealth of Independent States with focus on Russia
  • This report covers the banking sector that has evolved from the communist banking system.
Highlights

One of the side effects of the financial crisis in the CIS banking industry is the strong budgetary pressure to lower costs. However, this pressure is expected to be a short-term issue only (until early 2010). What is important is that the long-term growth objectives remain intact.

Companies that are interested in selling their solutions and services need to focus on the two primary criteria for selecting an IT vendor: price and the strength of the offering. It is important to highlight that the mentioned criteria take priority over local references and relationships.

Reasons to Purchase
  • This research will enable to you to understand changes in IT budgets and how they could impact your customers
  • This research will enable you to understand how evolving business pains will result in demand for specific solutions


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