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Retail Banking: Technology Roadmap for IT Strategic Planning

Posted on  18 April 14  by 

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FocardiIT departments have multiple types of IT roadmaps, for IT inventory management, lifecycle management, system consolidation and strategic planning.  Although business strategies or changing market requirements clearly impact IT spending, IT planning is often done in isolation from business strategy, or technology plans and business plans are changed at different cycles and become misaligned. 

Yet the demands on the IT department are such that it is required to align spending with strategic priorities, build and communicate IT plans to other departments, and justify the level and allocation of IT investment dollars.  This includes the ongoing need to prioritize and sequence new technology investments and target IT investments where they will deliver the most business value. IT planners also need to look at IT development timelines, implementation risk, value and cost on a relative basis for all types of software applications in retail banking. 

This CEB TowerGroup webinar will:

Ensure your firm is getting the highest value from its IT planning processes.  Visit CEB TowerGroup, for more information.

How to Make an Exploit Like “Heartbleed” a Non-Event

Posted on  17 April 14  by 

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maloAnother day, another vulnerability.

The recent press regarding the OpenSSL vulnerability called “Heartbleed” is all-too-familiar for those who follow such things. Vulnerabilities in the technology that we use to run the tools of our information age are discovered en masse every day. What makes the Heartbleed story compelling is the foundational nature of the exploit and the possible exposure of authentication credentials. However, this is not the first example of this type of a problem and it won’t be the last. The speed of change and pure scale of software all but guarantees this.

Our members find the first task at hand in response to Heartbleed is in the clear articulation of the scope of the issue and potential impact. They have told us that initially their enterprise network and information security teams were working diligently to ensure a complete inventory of servers and network components in place that may be impacted by the vulnerability, and whether those components have or have not already been patched.

There is a patch that became available on March 21, and some server administrators have already implemented the update as part of their normal patch management schedule. Now teams just need to make sure all other vulnerable servers are patched, and recorded as such.

In light of recent events with Heartbleed, we recommend that banks do the following:

  • Scan your networks for the vulnerability using a commercial network scanning tool. Most should be updated to include the Heartbleed signature.
  • Review and update network inventories for external and internal information networks.
  • Reaffirm patch management processes and reporting for all network components.
  • Ensure best practice and participation with industry firms such as the Financial Services Information Sharing and Analysis Center (FS-ISAC) or relevant Computer Readiness Teams (CERTs) such as US-CERT.
  • Evaluate services from organizations that investigate vulnerabilities as well as provide patch instructions and recommendations. The key to this is the need to receive information which is “actionable,” not just interesting.

These steps form a basis for sound vulnerability and patch management strategy, but this strategy must also be woven into efforts across the enterprise. As our 2014 Technology Roadmap shows, this is a busy year for IT, and the time to clearly define and communicate this fundamental practice is now.

Financial Services Business Barometer: Growing or Shrinking Budgets?

Posted on  16 April 14  by 

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Analyzing the DataIn Q4 of 2014, CEB TowerGroup Wealth Management surveyed over 1,000 senior financial services executives from the largest global companies as part of a larger survey about business conditions and expectations of the financial services industry.  This report examines expected IT spending, as well as expectations for revenue growth, cost pressure, and sales.

Download this report to learn what financial services executives expect to change in 2014, including:

  • How executives expect spending for IT software to change: 46% of executives in North America expect spending for IT software to increase in the future, compared to 44% of executives globally.
  • How executives expect the operating margin to change: Compared with the past quarter, a higher percentage of executives expect an increase in cost pressure (63%, compared with 61%), while the same percentage expect increase in revenue growth (69%). 

Members can download the report Financial Services Business Barometer, Q4 2013: Quarterly Reports on Business Conditions and Expectations in Financial Services to expand on these and other trends.

Introducing the 2013–2014 Insurance Technology Survey Results

Posted on  15 April 14  by 

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CressmanEach year, CEB TowerGroup Insurance surveys insurance technology executives worldwide about the state of technology investment in their organization. This year, we surveyed executives on 23 technologies in insurance and asked them about the year of installation of their current technology, their planned adoption or replacement of the technology, the average spend on use, implementation and maintenance of each technology, and expected trends in IT budgets.

Some highlights of this year’s survey include:

  • 6 in 10 insurers expect spend on cloud technology to increase by 2015
  • One quarter of insurers plan to adopt predictive analytics by 2018
  • CRM adoption is expected to ramp up, with almost 50% of insurers reporting a spend increase by 2015

Members can review the survey results in two ways:

Drive Competitive Advantage with the Insurance IT Roadmap

Posted on  10 April 14  by 

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PauliSubmitting and justifying budgets every year probably hits most insurance executives list of “things I don’t like to do.” Getting the dollars allocated correctly is a significant challenge.  Our survey results show that core system spend still tops the charts, as well as other learnings such as:

  • The new role of cloud technology
  • How the risk associated with technology adoption has shifted
  • Technology value drivers are transitioning from “spikes” to balanced

Register now for our upcoming webinar, “The Realization of Service: 2014 Technology Roadmap for Insurance,” which will be useful for:

  • Insurers: Compare your planned investment roadmap to the overall industry.
  • Technology providers: Determine which software products will be most in demand, and which applications need to demonstrate greater value to the industry.
  • Technology buyers and sellers: Learn how insurers perceive the risk, value, and urgency of various technology applications

Visit the CEB TowerGroup Insurance web site to register today.

Now Available! Online Polling for Wealth Firms

Posted on  10 April 14  by 

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Submitting a VoteIn an effort to support our membership, CEB TowerGroup Wealth Management has been working to increase the frequency of our survey efforts to help wealth management firms quantify the impact and importance of technology investments.  We’re pleased to launch a new polling feature on our website. The first  question is:

Thinking about the level of digitization within your organization, please estimate the percentage of volume that enters your firm already in a digital format (e.g., new account forms, transaction requests, account changes, etc.)

New polls will be rolled out once a month, and will be posted on our member site and announced in our weekly newsletter.  Questions will typically come from anonymous users, and our team will release the findings shortly after the polls close.

Get involved in the polling process by:

  • Answering our current polling question
  • Submitting polling questions: E-mail our research team to submit questions to the polling queue.  Questions may be edited for clarity or to combine multiple member inquiries.

Portfolio Management: Two Factors That Set Innovators Apart

Posted on  9 April 14  by 

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FrenchAsset management firms cannot practice portfolio or risk management the old fashioned way.  Competition from low-cost indexed funds and ETFs is shaking up the industry.  Alternatives, from hedge funds to private equity, are increasingly drawing flows.  The increased competitiveness is forcing fees down across the industry, and firms need to adapt.  At the same time, generating investment returns without taking undue risk is more challenging than ever.  Investment firms are rethinking all aspects of their business, and innovative portfolio and risk practices offer a promising way forward. 

There are two things that innovative asset managers are doing to set themselves apart:

  1. Aim for integrated portfolio analytics:  Technology and functional areas once seen as distinct are blending into unified strategies.  Portfolio construction, risk forecasting, and strategy refinement are collecting around portfolio analytics, which combines components of each.  The best firms will capitalize on this shift by reorganizing structural siloes into efficient centralized systems that will benefit PMs and risk managers alike.
  2. Manage risk with enterprise dashboards:  Asset managers have long managed risk at the portfolio level, and had little incentive to push for an enterprise-wide view.  Regulatory and other pressures are shifting firms from this approach.  Survey data shows that only 42% of firms currently have a risk dashboard that provides firm-wide insight.  Leading firms will integrate disparate systems to estimate total risk and create a risk dashboard for executives.

Data at Your Fingertips: Using CEB’s Interactive Tool for Instant Access

Posted on  8 April 14  by 

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sturgillExplore CEB Towergroup’s survey data by generating custom cuts based on your data needs. Narrow results by customer demographics, region, wealth segment, business ownership and market type.

Business Barometer

  • Sixty-six percent of FS executives are expecting higher revenue growth, as well as increasing cost pressures.

Adoption and Investments in Retail Banking Technologies

  • Over half of retail banking executives feel that mobile payments solutions are of high value, yet also pose the highest risk across all technology investments.

Consumer Financial Monitor

  • Customers aged 47-65 are the least confident in retail banks across all trust indicators.

This is just a fraction of the data that is available from CEB Towergroup’s Interactive Data Tool.  Customize our proprietary survey data to meet your information needs.

Mobile Corporate Banking: A View From The Front Line

Posted on  8 April 14  by 

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PollitMobile corporate banking solutions provide corporate users the ability to receive alerts and perform transactions such as payments, deposits, and account management, from a mobile device.

The mobile landscape is evolving rapidly, and while the consumer banking space has seen broad adoption, the corporate market has been slower to use mobile devices to manage their banking activities. This is not surprising given the difference among the ways in which corporates interact with their financial institutions and execute financial transactions. Corporates may be firmly entrenched in in-person and online channels, and therefore hesitant to adopt mobile channels. However, corporate users are finally beginning to leverage mobile technology, and financial institutions are eager to offer users with a competitive and cost-effective offering.

To provide an attractive mobile offering, financial institutions are struggling with common challenges including when to invest, whether to select a provider or build a solution, and how best to deploy their mobile technology to users. While interviewing the three financial institutions, CEB TowerGroup uncovered several interesting insights specific to mobile corporate banking technology:

  • Institutions are satisfied with their technology selection, but have plans to evolve mobile functionality. None of the institutions planned to completely replace their solutions in the near-term, though they expressed the intent to roll out new mobile functionality, including advanced payment capabilities, expanded reporting capabilities, and user dashboards.
  • Corporate users identified non-traditional motivations for using mobile corporate banking technology. In addition to having the ability to transact while away from the office, corporate users highlighted disaster recovery, and improved work flow as additional reasons to adopt mobile banking solutions.
  • Revenue is not a driver for investment as the corporate solution has relatively low adoption rates and is not expected to be the primary user channel. Revenue was not a primary investment driver for the institutions CEB TowerGroup spoke with. Each institution each had adoption rates of less than 10% with inconsistent rates across verticals. However, institution indicated that raising adoption rates amongst corporates, not revenue generation, was the primary goal.

Read about these and other insights in the full Mobile Corporate Banking Solutions Tech Pulse to learn how institutions are viewing and investing in mobile technology.

Is Commercial Real Estate Lending Turning a Corner?

Posted on  8 April 14  by 

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PhanCommercial real estate was one of the hardest hit sectors of the financial crisis. It has also been one of the slowest to recover. Even after the acute phase of the crisis and the official end of the recession, demand remained subdued and noncurrent rates for CRE loans continued to rise, eventually cresting at 4.4% in 2010. This in turn wreaked havoc on the secondary market for securitized CRE loans, which after peaking at over $200 billion in 2007 virtually collapsed to almost nothing 2008-2009.  

So after almost five years of negative news, has commercial real estate recovered? The short answer is unfortunately no, in the sense that most metrics are still below their 2007 watermarks. Is commercial real estate rebounding? By most accounts, yes. A general pickup in business activity is driving renewed demand for more office and retail space. A composite index of commercial real estate prices measured by the Costar group shows that commercial property values increased by 8% in 2013, and have grown by more than 20% since their nadir in 2011. Accompanying rising property values is increasing demand for credit. The latest figures from the Fed’s Senior Loan Officer Survey show that a net of 48% of banks saw increasing demand for CRE loans, while 20% loosened credit standards. Demand for CRE-backed securities is also growing, surpassing $50 billion in 2013, as yield-starved investors hunt for sources of higher returns.

While most indications are positive, the lenders in the sector face several headwinds that need to be addressed:

  • New Competition: Non-bank lenders such as real estate investment trusts and business development companies have made significant headway into the space and are especially active in the SME lending segment.
  • Increasing Compliance Standards: Stricter AML and due diligence requirements require more heavy scrutiny of loan applicants, which increases the cost of origination. 
  • Risk Rating and Pricing: Unexpected default spikes during the financial crisis revealed huge flaws in banks’ underwriting capabilities, risk must be managed from both a credit and regulatory perspective and the loans should be realistically priced to reflect that.