New SunGard-sponsored research – Beyond the home market: The future of cross-border banking – from the Economist Intelligence Unit (EIU) reveals that, despite a tough economic climate, a significant number of banks, particularly in emerging markets led by Asia, are continuing to pursue expansion into foreign markets.
The research, which involved a survey of over 270 executives from banks and financial services companies around the world, was commissioned by SunGard to investigate key drivers and markets for cross-border initiatives.
While growth by Western banks has slowed, expansion in Asia and other emerging markets is still continuing. The survey also found that branch transformation, customer relationship management and integrated risk management will be the key focus areas for many banks in the near future.
Over 45% of respondents believed that their banks would enter or expand into new markets in the near future, with 40% stating that following global customers into foreign markets was the key driver for expansion. Over a third of those surveyed said that customer service would be critical to achieving and maintaining competitive advantage in new markets, followed by product innovation (30%), distribution (19%) and cost (14%).
The research also showed a strong focus on risk management, with 57% of respondents stating that this would be the most important area when assessing IT infrastructure needs in new markets. Finally, Internet Banking (53%) was highlighted as the most popular channel initiative by banks in foreign markets, followed by ATMs (35%) and mobile banking (5%). However, respondents believe that mobile banking will become a critical channel to engage with customers in the next three years.
“It is clear that broadening the customer base is an overriding reason for expansion into foreign markets, cited by 49% of respondents,” says Manoj Vohra, research director and senior editor from the Economist Intelligence Unit. “It is no surprise that many are looking to grow their presence in Asia, where a large unbanked population and relatively unsophisticated financial services infrastructure offer a good potential return on investment.”
“We commissioned this study in order to better understand the changing requirements and growth strategies of our banking customers,” says David Hamilton, president of banking business, SunGard.
“There is increased focus on issues such as cost efficiency, operational integration and risk and regulatory compliance, but it appears greater clarity is needed on how to effectively address these issues. We believe SunGard can help to provide that clarity – for instance by offering technology solutions for key areas such as customer relationship management and profitability analysis.”
L.D.