Independent research and advisory firm Financial Insights, an IDC company, observes that "the current economic crisis will result in lower demand for banking products, shifts in banking preferences among wary customers, and a rise in delinquencies and defaults." To effectively tame their impact, Financial Insights found that banks are formulating counter-cyclical technology initiatives including portfolio analytics, asset-liability management, and credit collections and recovery.
"Banks have to find ways to generate new demand and find new sources of income. Technology imperatives here include CRM and customer-centric projects, and payments initiatives to generate fee income," says Michael Araneta, senior research manager of Financial Insights Asia/Pacific.
Li-May Chew, CFA, senior research manager of Financial Insights Asia/Pacific, said that banks have recognized that the modes of operation during boom times are ineffective in a crisis environment. "IT optimization will be the key concern for bank IT leaders as they search for clarity in their existing technology assets, and see how these can be integrated more effectively to meet current and future requirements. The overarching objective is simply to do more with what you have," she said.
Asia/Pacific banks are still expected to increase technology spending in several overarching priority areas in 2009, albeit with much lower rates of growth compared to those seen in previous years. The 2009 priority list is made up of discrete projects, typically ad-hoc and tactical in nature. These include virtualization, customer loyalty, customer retention, credit collections and recovery, Software as a Service (SaaS), and so forth.
Financial Insights says Asia will continue to be an attractive market for banks due to the region's large domestic economies, recent wealth accumulation, relatively stable economic and corporate fundamentals, as well as pockets of under-served banking segments. However, it said that a confluence of negative factors has transformed the entire industry. "In 2007, and throughout the early months of 2008, it was about market-building. In 2009, it is all about survival, protecting the bank's base, and finding untapped areas of opportunity," said the Report.