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November 14, 2008

The Future Shape Of Banking Architecture In 2023by Jost Hoppermann for Enterprise Architecture Professionals

Making Leaders Successful Every Day

For Enterprise Architecture Professionals

The Future Shape Of Banking Architecture In 2023Industrialized Banking And The New crm Will Support High-TouchThis is the fourth document in the Banking IT In 2023 series. by Jost Hoppermann with Gene leganza, mimi An, and matthew czarnecki

November 14, 2008

ExEcuT I v E S u m mA ryForresters research on banking IT in 2023 identified a series of requirements and the architectural layers of the future banking platform. The key layers show: (1) a focus on personalized customer services and real-time information analysis; (2) a separation of product design and customization; and (3) a clear distinction between core competencies and nondifferentiation functions supported by selective sourcing. These layers will belong to one, two, or more financial services firms, and they will be connected via a federated semantic banking backbone. The outside world will use the services of these layers via the ubiquitous banking layer also know as the evolution of the multichannel layer.

TABl E O F cO N TE NTS2 Bankings Future Needs Loosely Coupled And Dynamically Sourced Apps 3 Apps Will Turn Into Networks Of Information And Business Services 13 Key Differences Between Today And The FuturerEcOmmENdATIONS

N OT E S & rE S O u rcE SForrester surveyed British Telecom (BT), Fidelity National Information Services, Hewlett-Packard, IBm, Infosys, microsoft, misys, Oracle, SAP, Sun microsystems, Tata consultancy Services, and Temenos, and interviewed a large number of banks in four world regions.

14 Manage The Present And Prepare For The FutureWHAT IT mEANS

Related Research Documents Financial Services Of the Future: collaborative competition Will Be The Norm August 20, 2008The multichannel Organization August 30, 2006 The Next-Generation Banking Platform may 31, 2006

15 Industrialized Banking Needs More Than TechnologyAlTErNATIvE vIEW

16 The Disruptive Event May Have Emerged 16 Supplemental Material

2008, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copy or slide of each figure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. To purchase reprints of this document, please email


The Future Shape Of Banking Architecture In 2023For Enterprise Architecture Professionals

BANKINgS FuTuRE NEEDS LOOSELy COuPLED AND DyNAMICALLy SOuRCED APPS To help enterprise architects create an IT vision for their financial services firms, Forrester began compiling scenarios for the banking IT of the future. These scenarios target the next eight to 15 years, although the timeline will differ for individual banks. We based the scenarios on vendor surveys and interviews of banking executives around the globe. The earlier parts of this series developed a summary of business scenarios and offered a look at the different types of bank branches of the future and showed how channels will support convenient customer interactions.1 This fourth part will summarize the key requirements that are driving the future of banking architecture as well as a high-level target state architecture, based on the input of the vendors we surveyed and the banking executives we interviewed. Business Requirements And Customer Behavior Will Drive Target State Architectures Our research revealed a number of key trends that will affect the organizational structure of a banks IT department and the way it does its business as well as the as-is and target state architectures in 2023. Global firms will move toward more fluid, integrative enterprises. (Vice president of strategy, large European bank) What will these enterprises look like?

There wont be enterprise IT as we know it today.2 In 2023, business processes will go

everywhere, and work time will be 24x7 around the globe. Enterprise and consumer IT will have converged. Wikis, blogs, community networks, and Social Computing will be a normal element of many IT environments. While the regulatory burden will most likely increase, it will be easier to deal with based on highly flexible systems and real-time availability of data, information, and related analysis. At the same time, old core competencies like core banking will move outside of banks interest, and utility-type service banks will offer many of todays traditional functions.

Branches will use sophisticated technology to create a great customer experience.3 Multiple

flavors of bank branches will deploy the most recent technology to serve customers with highly convenient interactions, presenting personalized offers and collecting information.4 Automated and human-directed avatars will extend the reach of the branch in terms of time, location, and product expertise. Collaborative technology will be mandatory to make customer information available at the best point in time and to combine the know-how of multiple experts across multiple bank locations. Branches will need to be a hub in a networked multichannel environment. They will connect locally to channel devices and use and present services that are also used via other channels, just more effective and more convenient for the customers.

Ubiquitous banking will be the rule.5 Ubiquitous 24x7x365 access will be routine. Serviceavailability will be based on various channels using devices in all sizes with heterogeneous

November 14, 2008

2008, Forrester research, Inc. reproduction Prohibited

The Future Shape Of Banking Architecture In 2023For Enterprise Architecture Professionals


capabilities. Ubiquitous banking will include a strong support of home entertainment and communication systems. Customers will not differentiate between mobile and nonmobile channels anymore. For the time being, Forrester calls these powerful, multifunctional devices wearable digital agents (WDA). At the same time, employees will have the full power of their organization everywhere in significant economies and at least in large cities everywhere else. The bottom line? Every component of functionality will be used by employees and customers around the clock and entirely independent of location. Ubiquitous banking the future shape of multichannel banking will include the branch as one of the most powerful channels and truly create the notion of banking services everywhere, whether these services are offered by a bank, nonbank, or social network. APPS WILL TuRN INTO NETWORKS OF INFORMATION AND BuSINESS SERvICES Based on the ideas and thoughts of vendors and banking executives around the world, Forrester has identified a number of key requirements for a target state architecture that is up to the needs of banking in 2023. We designed a layered high-level target state architecture to structure these requirements into a number of buckets (see Figure 1). These layers are creating the notion of a target state architecture that we call industrialized banking and that interacts with a layer supporting ubiquitous banking.Figure 1: The Future: ubiquitous And Industrialized Banking

Ubiquitous banking

The new CRM intraday BI customer data Ownership of data Product denition and innovation Industrialized banking

Dynamic business

The new core

Open source

Service banks

External services by IT service providers

Highly interchangeable Semantic banking backbone

47356 2008, Forrester research, Inc. reproduction Prohibited

Source: Forrester Research, Inc.November 14, 2008


The Future Shape Of Banking Architecture In 2023For Enterprise Architecture Professionals

Networked Multichannel Capabilities Will Be Mandatory A branch with fully integrated cross-channel capability is an achievement in 2008; it will be the norm in 2023. (Vice president, strategic planning, globally operating bank) Most survey participants agreed that their architectures need a much better support of channels. Today, many banks and vendors state that they still do not see any real-world need for crosschannel capabilities. However, many banking executives told Forrester that they expect this true multichannel capability to become mandatory in the future. Evolutionary improvement of aspects such as common look and feel across the various channels, highly intelligent help functions, and fully parameterizable screen designs and interactions will make change a nonevent. They also identified further requirements for a layer supporting ubiquitous banking:6

Flexible support of multiple channels and devices. Many vendors and banking execs

identified the need for a high degree of a dynamic plug-in capability of new channels and devices. Today, it is not even possible to target mobile phones as a single channel. As soon as more comprehensive channel capabilities become necessary, the different phones from Apple, Nokia, Sony Ericsson, and the like will need separate consideration. In the future, channel plug-and-play will become key across all channels based on a lightweight technology usable for many, if not all channels. In addition, functionality would include streaming video for employee training and customer targeting educational purposes. Product messaging will strongly affect the multichannel arch