March 6, 2008 - A new report by independent market analyst Datamonitor, “Business Intelligence in Retail Banking”, predicts spend by retail banking institutions on business intelligence (BI) IT in North America, Europe, the Middle East and Asia-Pacific, will reach $9 billion by 2012, up from $5.6 billion in 2006.


According to the report, the combination of compliance requirements, a competitive business environment, the subprime credit crunch and the need for stronger management will drive retail banks’ investment in BI software. Given the sector’s growth of IT budgets devoted to BI, many vendors from diverse backgrounds, such as reporting, analytics, data management and operations, have rushed to claim their stake by adapting their definition of BI to fit their offering.


“BI functionality is growing in demand as it tracks and monitors operational risk, and provides a more sophisticated and consolidated picture of risk exposure across all divisions,” said Jaroslaw Knapik, financial services technology analyst at Datamonitor and author of the study. “However, whilst many banks have already recognized the contribution that BI technologies can make in these areas, most of them are still far from achieving the maximum effect.”   


According to Datamonitor, solution areas such as risk management will represent the highest growth opportunities for BI technology. Spend by retail banks is expected to reach $1.76 billion by 2012. Risk assessment necessitates integration of data stored in a variety of disparate data warehouses as well as legacy applications across various lines of business. As a result, a data integration, metadata management and data store infrastructure will be vital to create this comprehensive view.


“The need to support financial analysis, customer intelligence systems and more formalized performance and risk management, have all collectively become an important organizational imperative,” said Knapik. “Furthermore, financial services companies are also facing ever-increasing regulatory pressures, which make it all the more important for banks to have risk management, fraud prevention and anti-money laundering systems in place.”

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