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Straight Talk Technology

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For 2019, there is a clear top ICT investment priority for retail banks around world: digital banking. Ovum’s ICT Enterprise Insights program (launched early this quarter) interviewed senior IT executives from over 450 retail banks, and consistently online and mobile banking were both identified as the top project spend areas for 2019 and were also the areas where banks expect to allocate strongest ICT spend growth.

In many regards this is not surprising. Digital banking has been the top ICT priority for retail banks in the last five years, driven by the fundamental shift in customer interactions to these platforms, which now dominate as the primary channels of choice for most customers (compared to ATM, branch, contact center, or post). The digital platforms are now effectively the "face" of a bank, and while most banks have an omnichannel strategy, the role of other channels has shifted, with branches now focused on dealing with "value-add" non-routine interactions, and contact centers focused on supporting the digital channels, with increasing focus on chat over calls.

However, a couple of things are further increasing its importance in 2019. First, the development to drive API-led open banking in a number of markets has incentivized banks to explore the role banks have to play in the digital economy and what digital services they can provide and support. The challenge at present is that these initiatives have been led by regulators and/or the industry itself, and customer awareness and interest is low. The second driver, advances in technology, particularly around artificial intelligence, is driving investment in embedding these technology innovations into digital platforms. Of particular interest here is investment in chatbots and/or digital assistants, particularly to enhance self-service and customer support capabilities.

By reflecting the investment prioritization by retail banks, this area is understandably receiving strong attention from most digital banking platform providers. As a result, there is currently a race to highlight providers' innovation capabilities, both in the ability to work with fintech innovators within the sector, and in the ability to incorporate new technologies such as artificial intelligence. However, while these areas are important, vendors need to remember one key point. Despite close to a decade of major investment in these platforms, most banks are still struggling to do the basics well.

The ICT Enterprise Insights data found that while investment in API and use of third party-apps and automated interaction capabilities has grown strongly as a major secondary priority for most banks, the top investment priority remains enhancing core existing platform functionality. This includes areas such as statement search, payment setup, and self-service capabilities such as address changes. Banks want to be able to continue to improve the user experience and capabilities for these core routine functions that make up the bulk of customer interactions, and while banks want to be able to show innovation to both investors and customers, enhancing this core will ultimately be the top priority. In the race to show new technologies, providers should not forget to concentrate on demonstrating how their platforms meet current customer requirements and adapt to meet new ones.

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