IT departments at financial services companies must innovate or hibernate to get through the recession, according to Gartner.
The analyst firm made the call at its Symposium in Cannes.
IT innovation can drive radical change in the business, while hibernation can minimise expenditure and leave the organisation with resources to deploy later in the economic cycle, said Alistair Newton, research vice president at Gartner.
Organisations that choose a middle way risk squandering their IT budget on incremental modernisation for little gain, he said.
“Far from being fast followers, companies in-between the two options will be ditherers or laggards who waste their IT budget on incremental modernisation, which will have little or no consequence for their business,” said Newton.
He highlighted four ways that financial services organisations companies can “embed innovation in their corporate culture and agenda”.
Branches need to be re-designed to sell and advise. Having pushed customers away from branches through telephone and internet banking, branch automation and multi-channel integration can let banks re-engage customers.
More focus is needed on personalisation. Technology can deliver new levels of customer personalisation. For example, one Spanish bank allows its customers to calculate exactly how much the bank profits from their custom and enables them to donate a portion of those profits to a designated charity.
Social networks are increasingly important. Some new entrants into the financial services market, such as the social networking start-ups, are trying to use social network technology.
“The next innovation step will be to bridge the gap between pure social networks and financial social networks, Gartner said.
Financial social networks are “leveraging social networks to initiate a new form of financial transaction, allowing members to not only share information but to actually start lending and borrowing to each other, cutting out the middle man – in this case the bank,” the analyst group said.
Banks must also upgrade their approach to payments. “Some of the innovations around payments are focused at the payment applications themselves and result in the deployment of multi-application cards and the use of loyalty applications.
“However, many innovations in payments will be invisible to customers, focusing instead on the more effective use of payment data and the re-architecting of bank payment infrastructures to support the deployment of organisation-wide payment hubs,” the analyst said.