The banking industry continues to focus on growing the retail banking business as a stable source of profit. Key objectives include strengthening existing customer ties, winning additional retail customers through acquisitions and mergers and driving international growth. Competitive pressure is the main factor driving banks to deploy the latest information technologies in a move to reduce costs and boost efficiency. Banks continue to invest in retail banking systems and are working hard to expand their service offerings to clients. The trend is to use different sales channels in parallel. In this context, the traditional bank branch remains a highly attractive means of promoting direct customer contact. Increasingly, branches are being equipped with complex, multifunctional products that offer new services or automate processes to reduce staff workload. Also in high demand are software solutions that strengthen customer relationships as part of a bank’s customer loyalty activities. Another potential area is cost cutting by optimizing the cash flow cycle. Many banks also hope to achieve international growth through takeovers and mergers.

In geographical terms, the market offers a differentiated picture. Banks in Germany continued to invest cautiously while many retail banks in Western Europe invested in IT to rationalize their branch operations. Eastern European countries continued to experience strong market growth. Following the infrastructure replacement of recent years, banks in this region began equipping their branches with new self-service and automation solutions in line with growing customer expectations and demands. In North America, too, self-service and automation solutions remained in strong demand. This demand was driven in part by so-called “off-premises” providers that continue to expand their ATM networks. The Latin American market continued to grow at good levels. Strong competition among Asian financial institutions has also spurred growth. The worldwide trend toward expanding branch banking operations is now increasingly taking hold in Africa and the Middle East.

Banks are concentrating more heavily on their profitable core businesses and consolidating their IT structures. In so doing, they aim at harmonizing and optimizing their existing IT platforms with a view to reducing costs. For this reason, many banks are outsourcing parts of their IT operations to IT service partners. Some, in fact, are signing contracts to outsource complete business processes such as ATM services and even their entire IT operations.

The retail sector is characterized today by large international corporations engaged in fierce competition. New business opportunities are emerging through their international expansion, particularly in Eastern Europe and Asia. Strong competition in domestic markets has resulted in price wars. Retailers are using new tailored services to differentiate themselves from competitors. All striving to streamline internal processes as much as possible, with IT seen as a key competitive tool. Standardized point-of-sale and store management software simplifies global deployment. At the same time, customers are being offered new self-service solutions such as self-checkout systems and reverse vending machines for returning bottles and other containers.