By Natasha Lomas, 5 November 2008 10:37
NEWS
Financial institutions are being warned they have two tech choices in order to survive the economic downturn: either go all out and plump for radical IT-enabled change, or make like bears and hibernate until the storm blows over.
Analyst house Gartner says organisations that attempt a third way by treading the middle ground risk blowing their IT budget and having little to show for it.
Alistair Newton, research vice president at Gartner, said in a statement: "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."
But he said companies that choose a "big bang" approach to IT in the gloomy macroeconomic climate must develop accurate cost-benefit models, linking IT change to business metrics so they can quantify benefits and justify the radical transformations they encourage.
Newton said examples of 'bold' innovation could include banks rearchitecting payment infrastructures to support the rollout of organisation-wide payment hubs, and redesigning and automating processes in branches to create opportunities to sell new products and services to customers.
Using social networks to better engage with customers is another area banks can benefit from getting involved with.
He warned the turbulent market is giving new FS entrants opportunities to steal banks' customers - citing financial social networking start-ups that he said not only threaten to out-innovate banks by embracing web 2.0 tech, but are also threatening to cut out banks entirely by allowing members to start lending to and borrowing from each other.
"Banks need to be aware of this threat and adopt the appropriate response, taking into account their own capabilities and desires to defend their customers from acquisitive aggressors," he warned.
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