Usually banking and business analysts wait until January to issue predictions, technology and otherwise, but now in mid-December a few have already cropped up.
A quick read of these early ones find they predict increased technology investment budgets and intensified security threats, as well as some really out-there techno-trends. No doubt there will be many more “Top Whatever” lists to come in January, but here’s a quick rundown of some of the early entrants.
First, just for the what-if wonder of it all, come these from Strategy Analytics. This company isn’t necessarily just talking about banking and financial services, but what they see in their crystal ball affects a lot of us in general. Here are five of their Top Ten:
- • Wearable devices need clearer use cases to reach mainstream consumers. [Presumably, they are referring to gadgets that have already cropped up, such as digitally connected wristwatches and eyeglasses. Who knows what else could show up in 2014.]
- • Smartphone camera wars will shift from focus on resolution to experiences. [Already some smartphone cameras have as much capability in terms of megapixels, focus, and zoom as dedicated professional cameras.]
- • Low-energy Bluetooth will enhance location-based services. [Almost ten years ago, a paper by IEEE posited that low-energy wireless communication, such as Bluetooth, could enhance indoor location-based services, such as what a merchant could use inside a store.]
- • Streaming video on demand will accelerate and threaten traditional broadcast television. [Netflix is a leader in this.]
- • Consumers will begin to experience autonomous driving. [Just let me know when so I can stay off the streets.]
From the science fiction to the nuts-and-bolts, a couple of analysts have weighed in on IT investment trends.
First, Gartner, which always takes a longer view of things, goes beyond 2014:
- • By 2018, 20% of spending on new technologies will be on fully integrated as-a-service platform solutions.
- • Some mature processes such as payroll, order to cash, and procure to pay, already are offered in a platform-enabled business process-as-a-service manner. Looking ahead, it says: “New opportunities lie in innovations and business models, such as digital marketing, mobile wallet, white-label app stores, electronic commerce, multichannel customer experience, sustainability solutions, and new data-intensive applications that produce real-time insights.”
Second, CEB looks specifically at 2014. It expects:
- • IT budgets will rise 3% from 2013 levels, even as CIOs struggle to increase investments due to stubbornly high maintenance costs and mandatory spending.
- • In response, other functional business leaders, such as human resources, research and development, marketing, and sales, will spend up to 40% more on technology initiatives on top of the official IT budget.
“On average, business leaders tell us they want a 20% increase in employee productivity to meet their goals. Unfortunately, this year’s IT budget benchmark shows little growth to enable that. CIOs must help their organizations rethink how they allocate capital within IT and they must find new ways to identify and influence the significant number of technology spending decisions that non-IT business leaders make for themselves,” says Andrew Horne, managing director, CEB.
IDC made its own budget prediction for 2014, focusing on financial services. It also weighed in on related areas, some of which follow:
- • Overall IT spend in financial services will exceed $430 billion in 2014, and will exceed $500 billion by 2020, due in part to consolidation and cooling emerging markets.
- • Institutions will leverage their investments of the past three years, improving compliance data management with new initiatives to extract additional business and operation value with analytics-based capabilities.
- • Core transformation projects will create opportunities for banks to out-innovate their peers, giving innovators years of technology advantage over core banking laggards.
- • Consumers will become the disruptors in financial services by minimizing their interactions with their primary institution and increasing the use of a variety of purpose-built apps that provide immediate and focused value.
- • Mobile and alternative payment adoption will remain muted in 2014 as a wide array of providers try to find a value proposition that resonates for both merchants and consumers.
“As the IT organization continues to struggle with when and where to invest in today’s technology, financial institutions need to balance investing in innovation and providing value for the customer, with placating the regulators,” says Scott Lundstrom, group vice president and general manager, IDC Financial Insights.
Finally, on a somewhat troubling note but in an area that unfortunately is very easy to predict, cyber attacks have become the new normal for the financial services industry.
So says Booz Allen Hamilton in its report of cyber security trends for 2014. Among its specific trends to watch next year are these:
- • Mid-tier banks and nonbanking financial institutions, such as wealth management organizations and hedge funds, will face increased targeting by attackers as the larger institutions start to prove too formidable in terms of financial, technology, and manpower resources.
- • Insider threats will require firm-wide planning and preparation through multidisciplinary teams to increase staff awareness and knowledge about what to do when something untoward is detected.
- • Big data demands data-level security while offering broader cyber solutions. Fine-grained security controls are necessary to ensure banks not only avoid sharing sensitive data, but also defend against adversaries moving laterally across their data sets.
“As financial institutions increasingly deploy mobile and cloud technologies and integrate their partners, suppliers, and customers, their data perimeters are becoming much harder to define. As a result, some are essentially redefining the concept of a network perimeter,” says Bill Stewart, senior vice president, Booz Allen Hamilton.
There’s a lot to think about here. One sure prediction—more predictions are due with the coming of the new year.