The drive by growing numbers of banks to radically update their IT infrastructure to facilitate digital banking is likely to open the door to a raft of smaller IT suppliers such as Umbrella Company techies, a new report from analyst firm Celent suggests.
The study, which focuses on US banks, is also directly applicable to the European banking sector. On both sides of the Atlantic new suppliers attempting to enter the market have hitherto face formidable barriers due to tight security and heavy regulation in the sector; however, banks are finding that the talent needed to restructure some of their legacy core banking platforms is dwindling due to consolidation amongst domestic suppliers.
James O’Neill, senior analyst at Celent, explained that this is creating a market opportunity for other suppliers on an international scale, with large banks moving to modernise their “unflinchingly rigid and inordinately complex” core system architecture to meet the challenges of digital banking.
The race has already started in Europe, with Lloyds Bank and ING progressing their digital strategies vigorously. Lloyds Banking Group is preparing to shed 9,000 jobs through digitisation, which will automate a raft of manual tasks.
Techies from the UK’s professional contracting community are likely to be amongst the beneficiaries of the digitisation stampede. The CIO of HSBC’s Global Banking and Markets division, Sumeet Chabria, recently told Computer Weekly magazine that smaller suppliers would now have an opportunity to get involved as UK banks look beyond their traditional banking strategies of employing large in-house IT teams.
He added: “We need to access talent wherever it is present and use it for innovation.”