Fact #1: Revenue per Employee in 2011
dropped to half of their 2006 levels in 2011 for some top European investment banks.
Fact #2: The EU FS sector will
spend between €33.3bn-€50Bn over the next three years simply to comply with new regulatory demands.
Ongoing crises, falling revenues and looming compliance costs - could these be the common enemies that are bringing Business and IT closer together than ever before?
- Bankers (i.e. the business divisions generating revenues) hardly ever bothered what it costs to bring in the Euros. Each geographical division and each product / asset class simply wanted their shiny new trading or core banking platform- and a dedicated
team to take care of it all.
- IT leaders who ran the IT / Back Office for the business did not much care what it cost to run it. Those running large transformation projects focused on finishing it in time without bothering about the budget. Cost cuts meant releasing some external contractors
or across-the-board rate cuts with key vendors.
Fast Forward to 2011-12
- Revenue generating business folks have had to figure out IT and the Web; in some cases because their competitors are using it to win business. In others, because their bosses are asking hard questions about Cost-to-Income ratios, while
external regulators and internal Risk and Compliance officers are forcing business divisions to achieve compliance deadlines.
- IT leaders are being forced to put on their business hats to decide where to reduce costs, but also how to spend wisely in areas that can help Business increase revenues in the short term - usually around CRM and multi-channel, up-sell/cross-sell
to increase business from existing clients etc.
Finally, CIOs and COOs at some Tier-1 banks could even be the new business-generators, with a trend towards utility models that can help Banks white-label and take their services / platforms to smaller / Tier-2 banks. As per BCG's
recent study, between 2008 to 2011, IT costs escalated by 30% for Tier-1 banks, but 45% for Tier-2 banks, so I guess there is a market opportunity for IT!