Canadian banks need to enhance cash management offerings
By Robin Arnfield, News Editor
Canadian banks’ cash management platforms are at a technology crossroads, and need to modernized if foreign entrants are not to dominate the market, says a report from U.S.-based consultancy Aite Group. The ‘Trends in Canadian Cash Management: A Technology Crossroads’ study is based on Aite Group interviews with the six largest Canadian banks as well as with HSBC and Citigroup’s Canadian operations.
The report says that, while large Canadian banks have long enjoyed a domestic market with limited competitors, regulatory barriers to foreign entry have become more relaxed in recent years. This has allowed more foreign banks to enter Canada, and to attempt to win Canadian businesses by offering global platforms and modern architectures.
The Canadian banks’ cash management customers are demanding greater customization and require global capabilities to meet their evolving business needs. While the Canadian banks’ online cash management offerings are capable of meeting the current functionality needs of most of their clients, they are an average of eight to 10 years old and desperately in need of a face-lift, Aite Group warns.
As Canadian banks begin to enhance their current offerings, initiatives are falling into four key focus areas: customizing the user interface; creating a single platform for all cash management customers; converging single products through a common portal; and enhancing functionality.
The report says that Canadian banks are displaying a far greater willingness to deploy vendor-developed cash management solutions than they have previously. Currently, two-thirds of large Canadian banks are operating home-grown solutions. Aite Group predicts that at least four of the six largest Canadian banks will be running a vendor-built solution by 2013.
“While all of the major Canadian banks recognize the need to ramp up their online capabilities, each remains at its own stage of the process,” says Christine Barry, research director with Aite Group and co-author of the report. “This has created opportunities for those furthest along to leap ahead of their competitors. As they re-evaluate their strategies, many are demonstrating a greater willingness to deploy vendor-built solutions than they have in the past.”