Archives for December 2010
December 23, 2010 by Leave a Comment
It’s that time of the year again! I don’t mean the holidays unfortunately. I’d like to say that my mind has been busy with holiday planning but I have been otherwise occupied with bank IT spending. I’ve spent the last little while working on our global IT spending reports for 2011 along with my colleagues across the globe. I’ve also been busy preparing our 2011 North America bank IT spending report. The question everyone is asking – will 2011 mark the start of a turnaround? I would love to give you the answer now but you will have to sit tight until January as that’s when both these reports (along with our top trends for 2011 reports) will be released. I will provide a holiday teaser though – preliminary results for North American banking are pretty encouraging. Stay tuned and happy holidays!
December 15, 2010 by Leave a Comment
December 8, 2010 by Leave a Comment
The Federal Reserve published a summary of its 2010 Federal Reserve Payments Study this week. Predictably, the study evidenced double digit growth in debit and prepaid cards from 2006 through 2009, alongside essentially flat credit card usage. The study evidenced a continued decline in check writing of -6.5% CAGR, from 33.1 billion in 2006 to 27.5 billion in 2009. The anatomy of check usage was well reported in the study as well, with an analysis of check writing by counterparty and purpose based on a random sampling of checks processed by a small number of large banks. The results show double digit declines in C2B check writing (-11%), modest declines in B2B (-2%) and B2C (-3%) check usage and a growth in C2C check writing. In other words, businesses aren’t kicking the check habit – much.The implications of these findings are many. One deserves special mention in my opinion. Less check writing alongside growing use of self-service channels is eroding branch foot traffic like never before. It’s no shocker that check volumes in the United States have been declining for most of the last decade. What appears less well understood is the long-term effect of this decline and what financial institutions should do in response. In addition to steady declines in check writing is a steady growth in self-service deposit activity taking the form of image ATM and RDC usage. The aggregate impact of these trends points to dramatic erosion in branch transactional activity – and with it foot traffic. The chart below shows a conservative Celent estimate of resulting average effect on branch foot traffic. This is a polarizing picture. For financial institutions with highly automated branch networks and well-trained personnel, these trends can point to significant cost reductions without compromising customer service. For other financial institutions, branch channel cost reductions will prove comparatively elusive. All financial institutions should embrace these trends as a mandate to quickly develop multichannel sales and service infrastructures to accommodate the quickly changing landscape.
December 3, 2010 by 4 Comments
I recently reviewed an Oliver Wyman report on multichannel banking among large European banks that includes the results of a survey of 30 European retail banks from France, Germany, Italy, Spain and United Kingdom. Taking note of relative channel priorities among survey participants, I was compelled to compare those with stated priorities among US banks surveyed in July as part of a Celent research effort aimed at understanding the current and future state of branch infrastructure leading to a report published in August. The Celent survey gathered responses from 187 financial institutions. Among them were 33 banks in the >US$50b asset tier. The graph below compares stated channel priorities between the Europe and US >$50b responses. The graph shows the percentage of respondents rating each channel as #1, #2 or #3 in spending priority.I’d like to offer a few observations and invite your comments. In both regions: • Multichannel investment is a high priority • Branch channel remains the highest priority, closely followed by the internet channel. Interestingly, branch channel priorities are nearly identical across the two regions. • Mobile banking is the lowest priority channel However, there are several significant differences. Specifically: • The ATM channel is a much higher priority among large European banks than it is among the US sample. 50% of the EU banks rated the ATM channel #1 or #2 in priority compared to just 19% among large US banks. • The mobile channel is a comparatively low priority among EU banks (17% placing mobile banking among the top-2 priorities versus 26% among large US banks). Now, two questions for our readers. Feel free to post a comment or e-mail me directly at firstname.lastname@example.org if you wish to weigh in off the record. 1. Why is the ATM channel such a comparatively high priority among EU banks? 2. Conversely, why is the mobile banking channel such a comparatively low priority? I’ll post a summary of responses along with a Celent/Oliver Wyman position next week.
December 2, 2010 by 1 Comment
Working in the San Francisco, I am not unfamiliar with fog. Cloud Computing, SaaS, and Technology Outsourcing for Banks. We state that cloud computing is the use of computing resources, typically a server or part of a server, over the Internet. To amplify, this means that instead of installing a server on site, a company can take advantage of and utilize a server in some other location without having to manage (or know how to manage) the physical box. This is typically paid for on a per-usage basis over time rather than an upfront fee, meaning that a company could use the server for one hour a day and pay only for that time. In the banking industry we’ve had “Cloud computing” for thirty or forty years and it is called a service bureau. I am attending HCL’s analyst conference in Boston and was gratified to hear another voice blowing against the unrelenting storm of clouds. Vineet Nayar, CEO of HCL stated that he didn’t understand what all the fuss was about. He stated that he didn’t see anything new on the technology front around cloud computing. There are many new things that are associated with cloud computing: Server virtualization is a big deal, and provided by people like VMWare and IBM. Virtualization enables cloud computing, but isn’t new to the enterprise. Enterprises have been using LPARs (IBM’s virtual machines on the mainframe) since the advent of the System 370. This is important technology and a big deal. It isn’t cloud. We all know that server virtualization will have long lasting implications at large IT departments to increase efficiency and reduce costs. Software as a Service (SaaS) as exemplified by Salesforce.com is a subset of cloud. Software as a Service is when a vendor licenses an application to a client on demand, taking care of the management and maintenance of both the hardware and the software. The SaaS provider may be using the cloud to run its software. This is nothing but a service bureau: firms such as Metavante (now FIS) run software and systems and charge banks by per account per month. There is nothing new here. In a previous blog, I stated that I was won over to the cloud, hearing about banks using salesforce.com for account origination, and customer information. I am still a believer in this. I do believe that banks will continue to use other companies to access information, software functionality, and computing power. They have been doing so for the past thirty years. The term cloud is bandied about with great frequency, but I’m afraid that the reality is that this is more fog than cloud. Use server virtualization. Use the internet to access services from other companies. Call it private cloud, public cloud, or whatever you’d like. Just remember that when you add a lot of hot air to fog, it rises to become cloud.It can swirl around you and disorient you, obscuring the reality of what is really happening. I think that the hype around cloud computing is more fog than cloud. What is Cloud computing? From the Celent Report,
December 1, 2010 by 8 Comments
Ask Trust Bank. This Russian bank has chosen Bruce Willis to represent the bank in its new advertising campaign. Apparently the bank selected Bruce Willis because he embodied its slogan of “trust and dignity.” Bruce Willis’ mug now appears on bank billboards in Moscow and on the bank’s web site. The text on the billboard translates as, “Trust is just like me, but a bank.”
How the bank came to choose Bruce Willis is beyond my comprehension. I find it particularly interesting (and kind of funny) considering Willis’ role as a bank robber in the 2001 movie Bandits. Check out the trailer below.