More than two thirds of UK financial services firms think that the rate of IT change they are facing is too quick to keep up with and half feel their own technology is hindering their attempts to do so, according to Fujitsu.
The Japanese IT vendor polled 50 CEOs and CFOs at UK financial services firms, alongside 50 each from the retail and telco/utility industries. Not only do 70% of FS respondents believe the current rate of change is too quick for UK organisations to keep up with, 58% think a failure to do so is one of the most significant risks their organisations faces today.
Planning cycles are shortening to reflect the increasing rate of change; five years ago 56% of respondents felt they could plan two years ahead with a degree of certainty but this has fallen to just 22% today. A quarter of leaders in the sector say it is only possible to plan six months ahead with any certainty.
Asked what is driving this need for change, 82% say mergers and acquisitions, ahead of customer demand, cited by 70%. Customers also rank down the list when respondents are asked about the biggest risks associated with maintaining the status quo. While 96% say reduced turnover and 80% shareholder value, only 50% chose customer loyalty - far fewer than telcos/utilities (70%) and retail (68%).
Many banks are also unconvinced of the role technology plays in making a company agile, with only 58% considering it key, whereas 88% believe it is in the telco/utility sector and 82% in retail. One area where FS firms show most enthusiasm is cloud computing, considered a change enabler by 64%, compared to 60% in retail and 30% in telco/utilities.
Anthony Duffy, consultant, retail banking, Fujitsu UK & Ireland, says that the customer disillusionment, shrunken balance sheets, emergence of new rivals and regulatory upheaval of recent years have put huge pressure on financial services firms.
Says Duffy: "Technology is therefore crucial to a bank's ability to construct its business...The challenge for many financial institutions remains that they are constrained by legacy systems, which in some cases have been in existence for many years. These ageing IT systems are less flexible and more expensive to run than today's state-of-the-art equipment.
"In order to become 'Fit to Change', financial service organisations need to create environments which not only enables them to respond to change as it occurs, but also allows them to respond to situations that it has not anticipated."
Finextra verdict: Gone are the days when the banking industry could afford the luxury of a lengthy planning cycle for IT change. The rise of the Internet and the steady consumerisation of IT has blown away the formidable barriers to entry which once protected the industry from new competitors. Where once the UK's banks could circle the wagons and embark on a five-year programme to introduce chip cards, say, the arrival of new digitally-enabled modes of doing business has completely altered the business landscape. The UK banks' efforts to introduce an industry-wide P2P mobile payment system offer a prime example of the challenges posed in this new environment. Perturbed by the lengthy planning cycle, Barclays moved to roll out its own 'Pingit' payment app independently of its fellow banks. Such an action would have been unthinkable just five years ago. More worryingly, financial services respondents to the Fujitsu research are unconvinced of the role technology plays in making a company agile, with only 58% considering it key. It would appear that the industry is not just hampered by legacy technology, but also by legacy thinking.