According to IDC’s European Vertical Market survey, a large number of banks are already using Web services technology, while other financial services companies are working to implement the technology over the next two years. The insurance industry, however, is lagging behind, though investment plans will bring increasing focus on Web services.
In general, financial companies are keen to enjoy the benefits of Web services but have adopted a pragmatic approach and are cautious about implementing large projects.
“The best opportunities for IT vendors in terms of market growth come from brokers, stock exchanges, and securities and investment firms,” says Mirko Corbetta, research analyst for IDC’s European IT Opportunity: Financial Services research group. “This is due to the strong commitment players in these segments have to streamlining processes to reach the holy grail of straight-through processing.”
The survey highlights the following:
The increasing use of Web interfaces to manage horizontal and vertical applications shows that financial institutions plan to standardize and simplify access to their applications and increase interoperability among different systems. This is confirmed by the increasing use of XML, which promises to solve many of the problems faced by banks.
Banking has the highest XML penetration, while the insurance industry lags behind. Brokers and securities firms are expected to offer the best opportunities to IT vendors in future due to the high number of XML investment plans over the next two years.
Limited demonstration of strong ROI and the lack of executive management support and project funding are the main factors holding back Web services adoption. The financial industry still has to gain a better understanding of the real benefits of Web services before getting involved in large projects. IT players planning to target the financial services industry with cutting-edge technologies should take note of this.
The results of IDC’s European Vertical Market survey are presented in the study Are Western European Financial Services Companies Ready for Web Services? . The survey was carried out in December 2003 in Western European countries among banking, other financial services (securities firms and brokers), and insurance institutions with more than 20 employees.
The study provides an analysis of Web interface adoption trends including the status of implementation and future plans for the following technologies: ERP and back-office applications, CRM, industry-specific applications, and database/data warehouse; an analysis of XML adoption, including the current status of investment plans; and a major focus on Web services, including current status and investment plans, implementation strategy, application type, budget for Web services technology, and constraints to Web services implementation.