8 BankTechnology TrendsThat Will Shape theIndustry in 2012

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ArticleJanuary 2012

Source: http://www.banktech.comContributed by: Bryan Yurcan

8 Bank Technology Trends That Will Shape the Industry in 2012Copyright © 2012 Omnitech InfoSolutions Ltd

01

With IT budgets finally rebounding, BS&T identifies the eight trends that will shape tech spending in

2012 and determine banks' competitive positions for years to come.

For the past several years, bank IT budgets generally remained flat. The financial crisis and ensuing

fallout forced belt-tightening across the industry. In 2011, however, bank IT executives finally enjoyed

some breathing room thanks to some revitalized spending power.

And in 2012, bank technology budgets should continue to increase, if ever so slightly. But with the

economic recovery still on shaky legs, and with regulatory scrutiny more intense than ever, banks' IT

investments are likely to be focused largely on driving efficiencies and complying with new require-

ments. Bank Systems & Technology identifies the IT trends and hot technologies that will change the

game in the year ahead.

Convergence of Mobile and Online Technologies

Mobile banking started as a novelty, something only techies and first adopters felt comfortable using.

But as smartphones have skyrocketed in popularity over the past few years, mobile banking adoption

has increased along with it.

Initially, many banks' mobile offerings consisted of their online banking model ported to an iPhone or

Android device. As mobile has grown into a maturing channel, however, banks and their vendor

partners have produced richer mobile offerings that take advantage of its unique capabilities. And the

rise of the tablet gives financial institutions another unique interface through which to interact with

consumers (see No. 4).

"Mobile banking, when it first became a hot topic, was very much an offshoot of the online channel,"

says Jacob Jegher, senior analyst with Boston-based Celent. "Now mobile is maturing to the point

where it is its own unique beast."

While banks are embracing the mobile channel -- and continuing to support the old standby of online

banking -- they are not integrating the technologies used to build e-banking solutions, according to

Jegher. But that will begin to change in 2012. "We'll see banks continue to develop solutions for these

multiple channels but using a single set of technology to do so," he predicts. A cohesive set of

technologies, Jegher adds, will make mobile app and online development easier for banks to manage.

Jegher points to several high-profile acquisitions, such as Brookfield, Wis.-based core banking software

provider Fiserv's March 2011 acquisition of mobile banking and payments software provider Mobile

Commerce (M-Com; Atlanta), as signs that the industry is moving in this direction. "The reason behind

these kinds of acquisitions is because [vendors] need these tech assets that will allow them to serve

their customers," he explains.

As banks continue to search for efficiencies and consolidate operations, the convergence of mobile

and online technologies looks to be a prime opportunity to do so in 2012.

The Rise of Business Process Management

Both to increase efficiency and ensure regulatory compliance, banks need better methods of gather-

ing and reporting data. Most banks struggle with multiple back-office systems and siloed information.

To address these issues in earnest, there will be a large investment in new and improved business

process management tools in the year ahead, experts say.

Especially as banks wrangle with how best to harness Big Data and the technical challenges of analyz-

ing and reporting very large amounts of information with a quick turnaround, they will need to invest

in BPM tools that facilitate integration, says David Hamilton, president of the banking business at

SunGard (New York). "Many banks still wrestle with multiple back-office systems," he says. "They have

to master customer data management, and I think there is a fairly considerable investment to be made

And in 2012, bank tech-nology budgets should continue to increase, if ever so slightly. But with the economic recovery still on shaky legs, and with regulatory scrutiny more intense than ever, banks' IT investments are likely to be focused largely on driving e�ciencies and complying with new requirements.

“

”

in getting the basics right."

In addition, integrated data systems will help with risk management, Hamilton notes. "There's a need

for good-quality risk data," he says.

Data integration also will help banks obtain a more accurate view of their customers, Hamilton adds.

Marketers often talk about breaking through data silos to look at data holistically and gain a more

complete view of consumers' habits, and now banks will look to do the same, he says. "These big trends,

and the move for strategic cost reduction, map very clearly to bigger BPM investment," he insists.

Goodbye Email, Hello Message Center

The abandonment of email for anything sensitive already has begun, and the shift to total reliance on

message centers -- dedicated web portals designed for secure communication between a bank and its

customers -- looks to be here to stay. While organizations that have message centers today still use

them inconsistently, says Aaron Higbee, CTO of PhishMe, a Chantilly, Va.-based company that special-

izes in antiphishing training and education, they increasingly will become the norm for communicat-

ing with customers, rather than email.

The move to message centers will be beneficial on several fronts, according to Higbee. Many organiza-

tions currently employ third-party and joint marketing campaigns that have made unified messaging

difficult, he explains. They also continue to send emails with the actual messages in the body of the

email or include cryptic links. These practices make it difficult for end users to differentiate between a

legitimate email and a phishing email, so they will have to change, Higbee contends.

He adds that many bank employees believe only consumers are targeted by phishing scams; many are

unaware that they themselves are targeted by attackers trying to compromise the organization, and

they may be unprepared to recognize truly targeted phishing attacks from advanced attackers. This is

in line with a November report issued by Ernst & Young that found employees within organizations

and businesses are increasingly the targets of hackers rather than individual consumers.

The 'Tabletization' of Banking and the User Experience

Tablet banking is still a young channel, but it is rife with potential. As with initial mobile forays, it may

take banks some period of trial and error to determine how to build the best banking experience for

the tablet environment. But most experts agree that the potential for a great tablet banking user

experience, especially with the rich interface tablets offer, is nearly unlimited.

In fact, Celent's Jegher believes that as banks realize the opportunity that the tablet format offers, they

will begin to redesign their online banking experience to be more like their tablet banking offerings.

"The current state of tablet banking, being very immature, you usually take what you have online and

just put it into the tablet banking app," he notes. "But what if you thought about it the other way

around? The tablet offers the richest interface out there. What if online became influenced by tablet

banking? The functionality of online banking is very mature, but the user experience is immature."

Customers now expect a customizable, personalized experience on their terms, Jegher says. The

"tabletization" of online banking and the advent of cutting-edge mobile technologies, such as mobile

remote deposit capture, speak to the evolving bank user exeprience, he comments, adding, "This user

experience trend is becoming more mainstream."

With IT budgets finally rebounding, BS&T identifies the eight trends that will shape tech spending in

2012 and determine banks' competitive positions for years to come.

For the past several years, bank IT budgets generally remained flat. The financial crisis and ensuing

fallout forced belt-tightening across the industry. In 2011, however, bank IT executives finally enjoyed

some breathing room thanks to some revitalized spending power.

And in 2012, bank technology budgets should continue to increase, if ever so slightly. But with the

economic recovery still on shaky legs, and with regulatory scrutiny more intense than ever, banks' IT

investments are likely to be focused largely on driving efficiencies and complying with new require-

ments. Bank Systems & Technology identifies the IT trends and hot technologies that will change the

game in the year ahead.

Convergence of Mobile and Online Technologies

Mobile banking started as a novelty, something only techies and first adopters felt comfortable using.

But as smartphones have skyrocketed in popularity over the past few years, mobile banking adoption

has increased along with it.

Initially, many banks' mobile offerings consisted of their online banking model ported to an iPhone or

Android device. As mobile has grown into a maturing channel, however, banks and their vendor

partners have produced richer mobile offerings that take advantage of its unique capabilities. And the

rise of the tablet gives financial institutions another unique interface through which to interact with

consumers (see No. 4).

"Mobile banking, when it first became a hot topic, was very much an offshoot of the online channel,"

says Jacob Jegher, senior analyst with Boston-based Celent. "Now mobile is maturing to the point

where it is its own unique beast."

While banks are embracing the mobile channel -- and continuing to support the old standby of online

banking -- they are not integrating the technologies used to build e-banking solutions, according to

Jegher. But that will begin to change in 2012. "We'll see banks continue to develop solutions for these

multiple channels but using a single set of technology to do so," he predicts. A cohesive set of

technologies, Jegher adds, will make mobile app and online development easier for banks to manage.

Jegher points to several high-profile acquisitions, such as Brookfield, Wis.-based core banking software

provider Fiserv's March 2011 acquisition of mobile banking and payments software provider Mobile

Commerce (M-Com; Atlanta), as signs that the industry is moving in this direction. "The reason behind

these kinds of acquisitions is because [vendors] need these tech assets that will allow them to serve

their customers," he explains.

As banks continue to search for efficiencies and consolidate operations, the convergence of mobile

and online technologies looks to be a prime opportunity to do so in 2012.

The Rise of Business Process Management

Both to increase efficiency and ensure regulatory compliance, banks need better methods of gather-

ing and reporting data. Most banks struggle with multiple back-office systems and siloed information.

To address these issues in earnest, there will be a large investment in new and improved business

process management tools in the year ahead, experts say.

Especially as banks wrangle with how best to harness Big Data and the technical challenges of analyz-

ing and reporting very large amounts of information with a quick turnaround, they will need to invest

in BPM tools that facilitate integration, says David Hamilton, president of the banking business at

SunGard (New York). "Many banks still wrestle with multiple back-office systems," he says. "They have

to master customer data management, and I think there is a fairly considerable investment to be made

in getting the basics right."

In addition, integrated data systems will help with risk management, Hamilton notes. "There's a need

for good-quality risk data," he says.

Data integration also will help banks obtain a more accurate view of their customers, Hamilton adds.

Marketers often talk about breaking through data silos to look at data holistically and gain a more

complete view of consumers' habits, and now banks will look to do the same, he says. "These big trends,

and the move for strategic cost reduction, map very clearly to bigger BPM investment," he insists.

Goodbye Email, Hello Message Center

The abandonment of email for anything sensitive already has begun, and the shift to total reliance on

message centers -- dedicated web portals designed for secure communication between a bank and its

customers -- looks to be here to stay. While organizations that have message centers today still use

them inconsistently, says Aaron Higbee, CTO of PhishMe, a Chantilly, Va.-based company that special-

izes in antiphishing training and education, they increasingly will become the norm for communicat-

ing with customers, rather than email.

The move to message centers will be beneficial on several fronts, according to Higbee. Many organiza-

tions currently employ third-party and joint marketing campaigns that have made unified messaging

difficult, he explains. They also continue to send emails with the actual messages in the body of the

email or include cryptic links. These practices make it difficult for end users to differentiate between a

legitimate email and a phishing email, so they will have to change, Higbee contends.

He adds that many bank employees believe only consumers are targeted by phishing scams; many are

unaware that they themselves are targeted by attackers trying to compromise the organization, and

they may be unprepared to recognize truly targeted phishing attacks from advanced attackers. This is

in line with a November report issued by Ernst & Young that found employees within organizations

and businesses are increasingly the targets of hackers rather than individual consumers.

The 'Tabletization' of Banking and the User Experience

Tablet banking is still a young channel, but it is rife with potential. As with initial mobile forays, it may

take banks some period of trial and error to determine how to build the best banking experience for

the tablet environment. But most experts agree that the potential for a great tablet banking user

experience, especially with the rich interface tablets offer, is nearly unlimited.

In fact, Celent's Jegher believes that as banks realize the opportunity that the tablet format offers, they

will begin to redesign their online banking experience to be more like their tablet banking offerings.

"The current state of tablet banking, being very immature, you usually take what you have online and

just put it into the tablet banking app," he notes. "But what if you thought about it the other way

around? The tablet offers the richest interface out there. What if online became influenced by tablet

banking? The functionality of online banking is very mature, but the user experience is immature."

Customers now expect a customizable, personalized experience on their terms, Jegher says. The

"tabletization" of online banking and the advent of cutting-edge mobile technologies, such as mobile

remote deposit capture, speak to the evolving bank user exeprience, he comments, adding, "This user

experience trend is becoming more mainstream."

Copyright © 2012 Omnitech InfoSolutions Ltd

02

8 Bank Technology Trends That Will Shape the Industry in 2012

Copyright © 2012 Omnitech InfoSolutions Ltd

03

8 Bank Technology Trends That Will Shape the Industry in 2012

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