Rao Peddada - Reflections Journal Issue 1  

The credit crisis may be forcing financial services companies to assume a back-to-basics posture, but leading players continue to apply new technologies to support more cost-efficient ways of doing business that enable them to keep pace with ongoing regulatory and demographic change.

The financial services industry -- locally and globally -- is at an inflection point, portending enormous change, along with measureless opportunity. The global economic crisis continues to alter the underlying market structure, as well as firms' business models. Demographic trends like the rise of the mobile, socially-networked consumer and the growth of emerging markets are transforming where and how financial services are delivered and consumed.

David Potterton, vice president of global research for IDC Financial Insights, leads a panel discussion at Cognizant Community 2010.

While many firms are going back to basics and focusing on core deposits and asset gathering, political leaders are pressing for increased lending. But managing the risk and cost of acquiring and developing the right customers remains challenging. At the same time, novel products, services and channels are creating new potential revenue sources. Regulatory developments are expected to force even greater change to products, services, business processes and supporting technologies.

Industry leaders discussed these themes and others in a roundtable discussion at the Cognizant Community 2010 Summit held in March in Scottsdale, Ariz. Led by moderator David Potterton, vice president of global research for IDC Financial Insights, the panel consisted of a cross-section of industry leaders, spanning the banking and brokerage continuum.

Our panelists discussed the key themes for their businesses this year. The CIO of a retail bank discussed the impact of an acquisition his bank completed in 2008, especially the task of integrating IT systems for the two large institutions. A lot of mergers fail because of IT integration, he said. And we certainly don't want to be part of that statistic.

A director at an online brokerage company that has grown by acquisition in recent years told attendees that the buying spree is providing an opportunity to take the firm's IT systems to the next level. He is looking at purchasing commodity IT applications (or continuing to use packaged IT applications) to remove the application development burden, enabling the company to focus more on differentiating itself from its competitors.

A senior executive from a global credit card company said his firm has three areas of focus this year: helping the business cut costs, keeping customer service as high-touch as possible and growing revenue. We are looking to be even more efficient and lean. That's an ongoing priority, he said. The trick, of course, is keeping costs down while maintaining the firm's high levels of service. We are also trying to use the new norm -- depressing as it may be -- to our advantage so we can actually grow revenue, he said.