IBM GLoBaL BusIness servIces Banking Executive Summary

From complexity to client centricity With simple smart service To prosper in today’s ever-changing world, banks too must change. They need to move beyond any existing organizational silos, infra-structure complexities and other constraints – and toward an operation centered on the client. Based on our most recent banking industry research, we believe banks worldwide should utilize sophisticated insight to: • Optimize risk by leveraging information • Increase revenues by becoming more client centric • Enhance operations by managing cost and complexity. Leveraging information to help reduce risk Banks are facing an environment of increasing risk and regulation. Hence, improving risk management techniques by eliminating operational silos, increasing transparency and implementing consistent risk management practices will almost always be a mandate for banks. Recognizing the value of analytics in optimizing risk, bankers in our survey rated risk management as the number one area where analytics could deliver long-term benefits. However, to effectively use analytics, as well as the wealth of information available, banks require additional tools and processes (see Figure 1). We believe the future belongs to banks that can balance risk, return and financial innovation. Risk-savvy banks will invest in analytics to leverage the vast amounts of informa-tion already available to improve insight, lower risk and optimize profits. Overview Nearly 90 percent of bankers in our global survey believe that transforming from the status quo is critical to profitability. Tomorrow’s banks must become more client centric by leveraging sophisticated insights to improve risk management, pricing, channel performance and client satisfaction. Simultaneously, banks in mature markets should reduce operational complexity, which we estimate costs them approximately US$200 billion annually.1 In emerging markets, where wealth is growing at nearly US$900 billion annually, banks should focus on wealth management, innovation and inclusion of the underbanked and unbanked.