SUMMARY 1
Impact 1
Ovum view 1
Key messages 2
Despite the downturn, structural and economic fundamentals remain strong for long-term growth 2
Banks are focusing on customer satisfaction while raising efficiency 2
There is moderate optimism on the IT budget agenda 2
The need for efficiency is driving online channel development 2
The IT vendor landscape remains largely unconsolidated across the CEE banking market 3
Vendors need to investigate the relationship between headquarters and centers of excellence 3
MARKET OPPORTUNITY 4
CEE and CIS markets need to be distinguished 4
Western European banks have increased their operations significantly in CEE 5
Foreign banks' entry has significantly influenced the economic environment in CEE 5
Positive effects of foreign banks' entry for the local market 6
Negative effects of foreign banks' entry for the local market 6
Banking sectors within CEE countries are on the road to maturity 6
Macroeconomic factors in the CEE region shape strong long-term growth potential 7
Low inflation rates a necessity to join the eurozone 9
The credit market is still far from saturation 9
Euro adoption still in progress 10
The financial crisis has hit the CEE harder than many had foreseen 10
The financial crisis reduced competitiveness for new lending 11
The financial crisis has created a vicious cycle between the consumer and commercial banking sectors 11
The behavior of foreign-owned banks will influence the development of the crisis 12
Stabilization is a necessity to join the eurozone 12
Technology opportunities and threats 12
Banks are focusing on customer satisfaction while raising efficiency 12
There is moderate optimism on the IT budget agenda 15
The need for efficiency is driving online channel development 16
The centralization of banking operations is changing the technology landscape 18
CEE technology spending will be shifting progressively toward Western Europe 20
Core systems, payment processing and branch technology expenditure will grow at a healthy rate 21
Technology market overview 22
Enhancements and a re-engineering of existing platforms high on CIO agendas 22
Payments technology expenditure driven by investments in anti-fraud and cards 24
Investments into middle office are driven by anti-fraud technology 25
Sales focus increasingly drives further investments into CRM systems 25
Vendors bet on analytic CRM technology 26
Channels are the center of interest for banks 26
Online technology consolidation underway 26
Branch expansion significantly drives channel investments 27
The ATM world is a three-horse race but outsourcers are catching up 28
Contact centers are still immune to centralization efforts 28
The product vendor landscape remains unconsolidated 29
Local software vendors will continue to be niche players 31
IT services landscape largely diversified 31
Both local and Western vendors have managed to significantly penetrate the market 31
IT services companies are looking for the 'hot spots' of banks 33
RECOMMENDATIONS 34
Recommendations for technology vendors 34
Vendors need to investigate the relationship between headquarters and centers of excellence while analyzing the decision-making process 34
Vendors need to reach critical mass to ensure successful uptake of SaaS 34
Local language skills are not critical but local domain expertise is 35
Local vendors should analyze their exporting options 35
Recommendations for banks 35
Western banks should evaluate local vendors' offerings that pose a low risk to operations 35
Banks should watch out for under-investing during the economic recovery 36
APPENDIX 37
Ask the analyst 37
Definitions 37
Definitions for Figure 18 37
Further reading 38
Methodology 38
Disclaimer 38
List of Figures
Figure 1: Central and Eastern Europe vs. rest of Europe 4
Figure 2: International banks have widely spread across Central and Eastern Europe 5
Figure 3: Banking development stages in transformation economies 7
Figure 4: Gross domestic product based on purchasing-power-parity per capita GDP in selected countries 8
Figure 5: Personal credit saturation level in CEE 10
Figure 6: CEE banks' objectives of IT investment strategy in 2010 13
Figure 8: CEE banks' objectives of IT investment strategy in 2010 14
Figure 8: CEE banks' major strategic goals for 2010 14
Figure 9: Change in IT budgets over 2008-09 and 2009-10 15
Figure 10: Crisis effect on IT budgets in the CEE banking sector 16
Figure 11: Business areas marked for IT investment by CEE companies 17
Figure 12: Raiffeisen's branch expansion plans by 2010 18
Figure 13: Technology areas marked for IT investment by CEE companies 19
Figure 14: Retail banking technology spending by country ($m), 2009-14 20
Figure 15: Retail banking technology spending by business function ($m), 2009-14 21
Figure 16: Primary core systems strategies, 2009-12 22
Figure 17: Payment technology areas marked for investment by CEE companies 24
Figure 18: Selected product vendors with presence in the CEE banking sector 30
Figure 19: Selected IT services companies active in the CEE banking sector 33
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