Dynamic IT and Integrated Financial Services:
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Maggie Scarborough, Research Manager, Corporate Banking
May 2006
A Financial Insights White Paper
Sponsored by Sterling Commercedata from IDC's 2004 and 2005 FINANCIAL INSIGHTS Line-of-Business Executive Surveys and IDC'sOPINION 2005 Services and Software LeadingFinancial institutions are at an inflection Indicators Study were also used inpoint - they must invest in new IT developing the content and conclusionsarchitecture in order to survive and for this white paper.thrive in the next decade. It is a journeythat will remake both IT and business SITUATION OVERVIEWarchitecture around new business Financial services companies mustmodels that extend into the financial generate more revenues from existingsupply chain of customers and customers or look elsewhere for growth.nontraditional partners. Financial The modest GDP of developed nationsinstitutions have been standing at the will not sustain the aggressive financialdoorway to the financial value chain for results the markets demand throughsome time. The economic conditions organic growth. Only a relatively smalland available technology are now ready number of institutions are equipped toto help them integrate and generate new pursue business in the riskier emergingvalue propositions and revenue. We regions of Eastern Europe, Asia, anddon't think many financial institutions Latin America where traditionalcan make the journey alone. IT banking products gain extended marketsuppliers have an opportunity to forge traction. The more difficult task forpartnerships with these institutions banks is to gain new sustaining growththrough thought leadership, as both from existing business segments byhave much at stake. creating value beyond the transaction.Those banks that move beyond simpleIN THIS WHITE PAPER transaction processing- a commodityIn this white paper, Financial Insights - to become value-added processconsiders how financial institutions enablers are more likely to succeed inmust meet the demand for growth by the next decade. extending into the financial supply On the B2B front, tapping revenueschains of customers and partners. requires the ability of the institution orWe also examine the industry, market firm to penetrate and collaborate withdrivers, motivators, and technology its value chain of customers, suppliers,attributes needed to meet the demand. and partners in the financial servicesA case study of Wachovia is included industry. Financial services institutionsfor illustrative purposes. must not only think like their businesscustomers but also execute ITMETHODOLOGY strategically and logistically in order toThis Financial Insights white paper is closely couple and offer processesbased on financial services IT spending within the working capital managementprimary research studies conducted in of the company (cash, inventories,2004 and 2005 and ongoing research short- and long-term lending and tradeand executive interviews of C-level and services including the credit extended toline-of-business executives in the areas customers). Financial Insights refers toof IT spending, enterprise performance the technology attributes needed for thismanagement, and corporate banking business transformation as dynamic IT. and treasury management. Research
2 | FIN201255 Dynamic IT and Integrated Financial ServicesEssential dynamic IT elements are as automation and management arefollows: organizational alignment of absolutely essential to remain standing asbusiness and IT; adaptive and effective either an acquirer or an attractive targetIT-based business execution including in the consolidating banking market. business process management and datatransparency; and resilient, efficient, Execution Gapand business-responsive IT automation CEOs and heads of lines of businessand management. Next-decade financial agree that IT responsiveness to businessservices survivors will: needs is key to accomplishing financial
. Master performance, risk, and agendas. Figure 1 shows a full CEOmarket insight agenda for IT with IT responsiveness tothe business rising significantly in. Be both low-cost operators and importance from 2005 to 2006. Figuregrowth-generating innovators 2, however, shows that IT (i.e., the. Build a flexible and adaptive CIO) does not believe as much in itsapplication infrastructure that allows abili... [download for more]
