New Technologies in Banking hype or reality Oldich

New Technologies in Banking: hype or reality? Oldřich Příklenk Country Director 27. 5. 2008 This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2007 Gartner, Inc. and/or its affiliates. All rights reserved.

Hype Cycle for Banking and Investment Services Front-Office Technologies, 2007 2 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Technologies moved off-hype cycle • Linux in Banking Delivery Channels (not taken off as a technology trend with specific applicability to banking beyond the trend for enterprises replacing or upgrading desktop computers and servers) • Deposit ATMs (was incorporated in the Advanced ATMs and Kiosks element) • Bank Document Imaging/Archive/Retrieval at Front Office (no specific applicability to banking and is tracked in other Gartner Hype Cycles) • Customer Natural Language Speech Recognition in Bank Telephone and Call Centers (and replaced by Speech Recognition in Contact Centers) • Real-Time Analytics, Profiles and Detection (broken into two technologies: real time analytics and centralized customer profiles) • Alert Technologies (it has reached the Plateau of Productivity) 3 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Priority Matrix 4 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Implications The Hype Cycle Explained Visibility Peak of Inflated Gartner’s Hype Cycle helps Expectations enterprises decide when to implement emerging technologies. As with all Plateau of Technology Slope of technology investments, there is Trigger Trough of Enlightenment Productivity no simple answer. Business needs and philosophies should Disillusionment determine when it makes sense to invest in a particular new “Type A” Adoption “Type B” Adoption “Type C” Adoption technology. Maturity Type A, Type B and Type C Enterprises are identified as Type A, Type B and Type C, based on the aggressiveness with which they adopt and use technology, which typically varies based on industry: g Type A enterprises are technology-driven, often using immature, cutting-edge technologies to gain an edge. g Type B enterprises are moderate technology adopters, implementing new technologies that have entered the mainstream. g Type C enterprises are technologically risk-averse and are usually among the last to adopt new technologies. © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Hype Cycle for Banking and Investment Services Front-Office Technologies, 2007 6 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Recommendations • You own your technology-related strategy, not your vendors • Innovators: Compete at the cutting edge of innovation and use IT as a weapon only if you have people/culture/strategy for that • Mainstream: Use IT to improve productivity, product quality and customer service, wait for technology to be tested • Laggards: Wait for a technology to become absolutely stable before deployment 7 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Taming IT Costs in Banking Felix Enescu EXP Executive Partner 27. 5. 2008 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Key Findings • IT spending has to continue for run-the-bank operations and "must have" projects. • Must also continue for those discretionary projects that can differentiate a bank in an increasingly commoditized industry with fickle customers. • Avoid "me too" spending that copies peers — but note that targeted IT investments have a direct impact on profitability at banks. • Whatever routes CIOs take to reduce costs aspects such as governance and cultural fit will be more important in the long term than short-term savings on price. © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Use cost containment techniques that not only save money but also provide business benefits • Some techniques just save money or delay expenditures • Others also provide business benefits because they reduce complexity and/or provide flexibility - Improve service levels SERVICE - Increase agility AGILITY - Reduce risk RISK REDUCTION Spend Less, Get More | EXP Special Report | Oct. 2006 Page 10 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Understand your costs at the macro and micro levels • Use activity-based costing (ABC) to understand major cost drivers ABC traces the cost of each activity to the reason why organizational resources were consumed in support of the necessary activities. TCO for Desktop User • Use total cost of ownership (TCO) to understand life cycle costs of major assets Spend Less, Get More | EXP Special Report | Oct. 2006 Page 11 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Compare your costs to peers carefully • Use common ratios and indexes carefully to identify areas for analysis IT Cost Metrics Pros Cons IT spend as percent of gross revenues Widely used, easy to calculate Can be very misleading: heavily influenced by revenue size, does not consider effectiveness IT operating budget per employee/user Widely used, easy to calculate Outsourcing can distort ratio IT professionals to total employees One measure of efficiency Outsourcing can distort ratio Industry standard metrics, e. g. , cost per mortgage, ton Puts IT in a business context Does not consider effectiveness Unit cost, e. g. , cost per MIPS, cost per gigabyte One measure of efficiency Many IS organizations do not have the necessary data available • Use benchmarking for more accurate comparisons and insights and compare your costs to peers carefully • Benchmarks can also show where further cuts are unwarranted or increased investment is required Spend Less, Get More | EXP Special Report | Oct. 2006 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Use the 25 common IT cost containment techniques framework to identify opportunities Manage Demand 1. Chargeback 2. IT PMO 3. IT Governance 4. Contingent Workers 5. Software as a Service 6. Capacity-on. Demand 7. Staff Reconfiguration 8. Selective Outsourcing 9. Offshore Outsourcing 10. Automated Software Distribution 11. Server/Storage Virtualization 12. Voice/Data Network Reengineering 13. Voice over Internet Protocol 14. Open-Source Software 15. Data Center Consolidation/ Automation 16. Standard Operating Environment 17. Teleworking 18. Refresh/ Upgrade Delay 19. Asset/License Management 20. Print Fleet Rationalization 21. Telephone Expense Management 22. Telephone Bill Audit 23. Contract Renegotiation 24. IT Operations Process Improvement 25. Apps Dev Process Improvement Link costs to demand IT cost containment Shift to Variable Cost Reduce Labor Cost Reduce Resource Costs Change Operating Practices Reduce Technology Cost Change IS Operating Model Improve IS Business Practices Spend Less, Get More | EXP Special Report | Oct. 2006 Page 13 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Recommendations • Resist calls to slash the IT budget, but do examine how IT can be run more efficiently. • Benchmark operations to assess how technology investments can support the business strategy. • Fight to preserve the IT budget for new projects that will make the bank unique and able to stand out from the herd. • Make provisions for IT spending on customer onboarding systems. • Bargain aggressively with IT providers and seek out emerging vendors © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Contacts Oldrich Priklenk Country Director KPC-Group, s. r. o. Independent Gartner Representative in Romania 10 Montreal Square Bucharest , Romania M: +420 603461866 E: oldrich. priklenk@gartner. com T: + 420 257322524, F: + 420 257325085 gartner. com © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Gartner delivers the technology-related insight necessary for our clients to make the right decisions, every day. Go to Slide Master to add client’s name, project # and date. 16 © 2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.