I’d like to share with the community the most significant trends in wholesale banking my analyst colleagues and I are anticipating for 2012.

The years following the 2008 financial crisis were challenging, and 2011 proved to be a continuation of that trend. While my analyst colleagues and I were optimistic at the start of 2011 that the year would bring both transformation and growth to financial institutions, recovery from the recession has been slower than we—and the market in general—expected. The ongoing crisis in Europe and growing tensions in the Middle East contributed to the 2011 slowdown. Further, despite a small increase in bank IT spending last year, new product development at most institutions was scarce, due in part to the heavy burden of compliance and cost-cutting projects eating away at spending budgets. As a result, most banks experienced limited progress on their initiatives last year; this means that many of our projected trends for 2011 will carry into 2012.

On a positive note, wholesale banking is well positioned for growth during 2012, and is likely to enjoy an increase in IT investment dollars compared to recent years. Our 2011 research found that investing in corporate banking technology is a top priority for approximately 64% of chief information officers (CIOs) and technology executives at large banks around the globe over the next two years. These individuals and their institutions understand the importance of their middle-market and large-corporate customers, and recognize that more than 60% of corporate treasurers believe their financial institutions do not fully understand their needs. By increasing their focus on the quality and amount of actionable information provided to corporate treasurers―and the ease with which corporate treasurers can access this information―financial institutions hope not only to retain these important customers, but also to improve satisfaction levels and cross-sell potential. Additionally, small-business customers continue to represent an untapped opportunity for banks and to promise new streams of fee-based revenue to those institutions able to implement an effective small-business strategy.

This short note wants to provide an outlook on the accuracy of the wholesale banking priorities that my colleagues and I asserted for 2011 and identifies key areas of opportunity for wholesale banking during 2012. We anticipate that banks’ technology investments for 2012 will continue to focus on customer experience, solution usability, and access to critical information in order to meet the changing needs of the market. Cost-cutting, improved automation and bank transformation will also be common themes within the industry throughout the year. Finally, 2012 will be the beginning of banks’ focus on differentiation within their wholesale-banking business line.

Top Trends for 2012 

At the start of 2011, we forecasted several wholesale banking priorities for banks that year. While many of our predictions proved accurate, banks’ level of investment in each area was less than we expected. We therefore believe that more work remains; 2012 will primarily be a year for banks to finish what they started and to begin implementing some of their back-burner initiatives. My colleagues and I forecast the top 10 trends for 2012 will be as follows:

1. Continued focus on risk management, fraud, and compliance
   
2. Increased investment in cash management and supporting technologies
   
3. Implementation of next-generation corporate portals
   
4. Supply-chain-finance automation and the role of banks
   
5. Focus on the customer experience
   
6. New treasury management systems (treasury intelligence management systems)
   
7. Connecting with small-business customers
   
8. Improvement of the payments process
   
9. Continuation of business-financing challenges
   
10. Concerns about  liquidity management