Report: Opportunities and Threats in the Central and Eastern European Banking (Strategic Focus) TOC

Despite the downturn, structural and economic fundamentals remain strong for long-term growth
The financial crisis has hit the region stronger that many had foreseen
Decreasing profitability is driving a shift to cost-cutting strategies
The financial crisis has polarized 2009 IT growth plans
Focus on branch development, driven by need for deposits, is a top IT priority
IT vendors' landscape remains largely unconsolidated across the CEE banking market
Vendors need to investigate relationship between headquarters and centers of excellence

CEE and CIS markets need to be distinguished
Western European banks have increased their operations significantly in CEE
- Foreign banks' entry has significantly influenced the economic environment in CEE
CEE countries are on the road to maturity of their banking sectors
Macroeconomic factors in the CEE region shape strong long-term growth potential
- Low inflation rates a necessity to join the eurozone
- The credit market is still far from saturation
- Euro adoption still in progress
The financial crisis has hit the CEE harder than many had foreseen
- The financial crisis reduced competitiveness for new lending
- The financial crisis has created a vicious cycle between the consumer and commercial banking sectors
- The behavior of foreign-owned banks will influence the development of the crisis
- Stabilization is a necessity to join the eurozone

Focus on revenue growth continues despite the risk of cost cutting requirements
The financial crisis has polarized 2009 IT growth plans
Focus on branch development, driven by need for deposits, is a top IT priority
- The centralization of banking operations is changing the technology landscape
CEE technology spending will be shifting progressively toward Western Europe
- Core systems, payment processing and branch technology expenditure will grow at a healthy rate

Centralization efforts drive reduction and re-engineering of existing platforms
Payments technology expenditure driven by investments in anti-fraud and the mobile channel
Investments into middle office are driven by anti-fraud technology
Sales focus increasingly drives further investments into CRM systems
- Vendors bet on analytic CRM technology
Channels are in the center of interest for banks
- Branch expansion dominates channel investments
- Online technology consolidation underway
- The ATM world is a three horse race but outsourcers are catching up
- Contact centers are still immune to centralization efforts
The product vendor landscape remains unconsolidated
- Local software vendors will continue to be niche players
IT services landscape largely diversified
Both local and western vendors have managed to significantly penetrate the market
IT services companies are looking for the ' hot spots' of banks

Recommendations for technology vendors
- Vendors need to investigate the relationship between headquarters and centers of excellence while analyzing the decision making process
- Vendors need to reach a critical mass before the crisis passes by in CEE to make SaaS up-take successful
- Local language skills are not critical but local domain expertise is
- Now is the time to buy as economic turbulence creates bargains
- Local vendors should analyze their exporting options
Recommendations for banks
- Western banks should evaluate local vendors' offerings that pose a low risk to operations
- Banks should watch out for under-investing during the economic recovery

Figure: Central and Eastern Europe vs. rest of Europe
Figure: International banks have widely spread across Central and Eastern Europe
Figure: Banking development in transformation economies
Figure: Gross domestic product based on purchasing-power-parity per capita GDP in selected countries
Figure: Personal credit saturation level in CEE
Figure: CEE banks' objectives to IT investment strategy in 2009
Figure: CEE banks' major strategic goals for 2009
Figure: Direction of IT budgets changes has diverged
Figure: Crisis effect on IT budgets in the banking sector
Figure: Expansion plans drive branch technology investments
Figure: Raiffeisen' s branch expansion plans by 2010
Figure: Centralization and expansion efforts drive investments in infrastructure
Figure: Retail banking technology spending by country through 2013 ($m)
Figure: Retail banking technology spending by business function through 2013 ($m)
Figure: Centralization efforts drive reduction and re-engineering of existing platforms
Figure: Anti-fraud and mobile payments drive technology spending
Figure: Expansion efforts drive investments into channel technology
Figure: Selected product vendors with footprint in the CEE banking sector
Figure: Selected IT services companies active in the CEE banking sector

Opportunities and Threats in the Central and Eastern European Banking (Strategic Focus)