By Emeka Aginam

A recent study, “The Benefits of Innovative Information Technology in the Banking Industry”, has identified that banks were moving too slowly in embracing technology and predicts doom for business growth should that continue without remedy.

The study also noted that until recently, income variability and heavy transaction costs prevented many people in African countries, including Nigeria, from accessing formal banking services.

It also stated that start-up costs associated with establishing new banking offerings are considerable, due to infrastructure investments and the build-up of new distribution channels. Thus, financial services provided through the mobile channel have emerged as a needed solution.

The study which was conducted by the Frankfurt School of Finance & Management, New York University’s Stern School of Business and Management, the University of Applied Sciences and Arts North-Western Switzerland, the Business Transformation Academy (Basel, Switzerland) and SAP, was executed through three pillars, including extensive desk research, followed by 20 in-depth interviews of C-level managers at various global banks, regulators, auditors and consultancies from the U.S, Europe and Africa.

The researchers also adopted online survey of more than 1,500 members of the alumni network of Frankfurt School of Finance & Management.

The study uncovered various trends in banking, most notably a large disconnect between regulators’ expectations and the ability of banks to meet compliance and reporting requirements.

Although many banks have plans to increase their budget for IT to invest in the necessary banking solutions to meet these changing requirements, the study found that unless they hastened their pace, fast growth would be elusive.

The study also provided detailed insights into the technology areas considered as most important for the industry. More than six out of 10 participants (65 percent) said mobile is the most important trend for the future, followed by in-memory computing (48 percent) and cloud (47 percent).

Respondents, in the study also recognise the opportunity in Big Data and analytics in banking and placed a much greater emphasis on the overall comprehensiveness of information.

The top two priorities in platform features noted are completeness of aggregation and the availability of real-time information.

Key expectations for Big Data

Throughout the study, banks expressed six key expectations for Big Data in process innovation. However, Big Data solutions are expected to enable banks to tailor their offerings to the needs of individual customers, improve the banks’ trading strategies, provide better insights into market dynamics and improve market research, among others.

According to the study, in order to implement customer-centric banking offerings to deliver better services, institutions would need to enhance their back office support systems to ensure customers experience the same quality standard through traditional or new communication channels.

As banks adopt advanced technologies to decrease the time lag on reporting, regulators have laid out their expectations.

Throughout the study, a clear consensus prevailed that regulatory requirements were the primary driver of business model changes.

Regulators, according to the study agree that required levels of risk reporting in banks cannot be met given existing IT infrastructure.

In order to achieve a sustainable infrastructure, regulatory authorities and auditors recommended that banks should make improvements including implementation of a central data warehouse, improvement of data and process governance, introduction of more automated processes, flexible and customised modules for automatic analysis, among others.