New initiatives are focused primarily on a long overdue transformation of legacy systems to remove painful constraints that aging technologies pose to business processes. This is one of the key topline findings from a new TowerGroup research report titled, Perspectives Across Financial Services Institutions: 2004 and Beyond. In 2004, TowerGroup believes the global financial services industry will be driven by the following strategic themes: - Customer trust: While trusted relationships are the cornerstone of financial services, customers still have a hard time linking their diverse cross-industry needs through one provider. As institutions reach deeper into the specific needs of various retail and wholesale segments, a more genuine expression of customer focus will begin to dominate the financial services landscape. - Operational excellence: Technologies for workflow automation, imaging, knowledge management, and business process management promise great returns to institutions still mired in a maze of paper documents, manual processes and repetitive hand-offs. - Internal and external innovation: Several leading institutions have embraced Web services technology to rationalize redundant technology functions (which are often duplicated across internal business silos). Others have formed strategic alliances and partnerships to offload commodity processes such as check imaging, or tap advanced capabilities such as relationship billing. The continued growth of networked connectivity between financial services functions, both inside and outside institutions, will allow institutions to offer a wider range of services to customers, while driving process changes leading to improved customer satisfaction, increased revenue, and cost efficiency. - Risk management: Facing pervasive regulations like Basel II, USA PATRIOT Act and Sarbanes-Oxley, proactive financial institutions will be looking to turn compliance into a value-added proposition for both customers and shareholders. In addition, a more holistic approach to credit, market and operations risk will increasingly allow institutions to reduce losses right where they occur and mitigate their total exposure. - Outsourcing: In the quest to reduce cost and time to market, financial institutions already entrust one-third of their IT spending to external providers. TowerGroup expects outsourcing in its array of shapes and sizes to progress at a steady pace across 2004. This is the second in a series of six 2004 Perspectives that TowerGroup will issue in the fourth quarter. In each 2004 Perspective, TowerGroup will discuss the critical business and technology issues and trends impacting the financial services sector in the coming year.
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