Hong Kong Bankers Prepare for Growth as Economy Starts to Recover

Tags: asia/pacific, banks, economic crisis, hong kong, risk management

IDC Financial Insights Asia/Pacific hosted 12 CIOs and IT heads from top Hong Kong banks at our recent Hong Kong Banking Roundtable. This was a closed-door session providing a platform for bankers to deliberate on the critical business, operational, and technology-related issues impacting their businesses, and forms part of a series of roundtables that IDC Financial Insights organizes across the Asian region.

Here, the consensus view was that the economic storm clouds seem to have cleared, with a glimmer of sunshine streaming through.

Latest Hong Kong Monetary Authority (HKMA) data indicates that Hong Kong has pulled out of its deepest recession since the 1998 crisis, and is currently joining Singapore on the road to recovery. The territory's seasonally adjusted GDP expanded 3.3% quarter on quarter in 2Q09, three times as fast as analysts had forecast, and finally ended four straight quarters of contraction.

Nonetheless, still wary of the fragility of the economic situation, Hong Kong bankers are placing concerted efforts to look for sustainable business growth - whether to consciously control expenses to fatten margins, to continually broaden customer engagements, or to undertake initiatives to strengthen payments and transaction services business.

With that in mind, topics that currently preoccupy business and IT divisional heads at the Hong Kong banks center around IT optimization, distribution channels, customer centricity and analytics, and compliance and risk management, most of which are tied to the omnipresent need to manage cost and unlock more value from customer engagements.

Technology optimization sees a focus on application portfolio management to reduce the cost of maintaining business suites, interest in Web-delivered IT services, and always with an eye on a quick turnaround on investments.

Meanwhile, a saturated, competitive market like Hong Kong where almost 200 banks and deposit-taking institutions jostle for wallet share means that creating an integrated and consistent customer experience across all delivery channels is key. Here, banks have entrenched internet banking presence but a weaker toehold for retail mobile banking, and point to the need to prepare themselves for the inevitable wave of mobile adoption.

The call for wider and deeper customer engagements sees increased investments in analytics to slice and dice customer data and accordingly redefine product design and marketing. Elsewhere, shareholders' push for more prudent risk management, reinforced by regulatory pressures, compels Hong Kong banks to review their internal risk control systems and reexamine technology investment in risk detection, avoidance, and management solutions.

The roundtable further sought feedback from participants on their growth strategy and technology initiatives for the short term. Here, the graph below outlines the strategic imperatives at Hong Kong banks over the next 12 months. There appears to be no letup in the focus on risk management and compliance, cost management and operational efficiencies. Banks are working on reining in cost and making the most out of limited resources via undertakings such as improving  processing turnaround times and throughput, reducing process redundancies, and perhaps integrating solutions onto fewer platforms in their drive to weed out inefficiencies.

The Hong Kong banks are also unique compared to peers around the region in that a core imperative includes market expansion - presumably with an eye into China, given plentiful opportunities in the mainland as it avoided the worst effects of the global downturn and still grew a robust 7.1% in 1H2009.

Note: Full insights are captured in the report entitled "Market Analysis: Hong Kong Banking Update 2009" (Doc #FIN219780). This covers discussions from the roundtable as well as the future strategy and technology undertakings of the participating banks for the upcoming months ahead.

Web 2.0 is dead: Long live Advanced Customer Care and Retention

Tags: accr, customer care, social media, web 2.0

Although the term was reportedly first mentioned back in 1999, Web 2.0 really became part of the global agenda in 2004. Since then, Web 2.0 has been one of the most talked about phenomena in the industry – especially in the last two to three years. And still, most companies are still struggling with how to grasp this phenomenon. Many, if not most, are still asking themselves how they can take advantage of Web 2.0 and turn this "thing" into something that can benefit their business.

And the common denominator for most is this: they are asking the questions – but they still haven't found the answer.

So – it's been more than five years since Web 2.0 and "social media" appeared on the agenda, and in those five years only very few companies have been able to make any real use of it. In the world of technology, five years is a life span these days. In the world of technology, something that fails to mature or produce tangible solutions and products in five years would most often be called a "fad" or a "flop" or a "failure". Arguably, Web 2.0 is not about technology – indeed this is one of the key misconceptions attached to the term – but regardless, five years is a long time for a term to stay alive if only so very few are able to make a buck on it.

Without any tangible benefits in the past five years for the majority, we have arrived at a junction where it makes sense to declare:

WEB 2.0 IS DEAD

If Web 2.0 is no more, that would leave us all with a sense of emptiness and an eagerness to fill this void by focusing on what's next. And, luckily for all of us, there is no reason for despair. The old "king" may be dead – but a new one is ready to take its place:

LONG LIVE ACCR

Today's economic climate has highlighted the need for good Customer Care to the extent that many companies now think of it as not only a key differentiator between companies but as an invaluable tool to capture new markets and new customers. Fortunately, new technology is transforming the way Customer Care can be provisioned. New ways to apply customer analytics, virtual call centers, multiple modes of communication, Web 2.0 and virtual worlds are changing how companies reach new customers and keep existing customers engaged. IDC refers to these new tools as "Advanced Customer Care and Retention" or ACCR.

The observant reader would have noticed that I just mentioned Web 2.0 as part of ACCR. And consequently, I'd be contradicting myself – for if the former were dead, then how could it be part of the latter? (The not too observant reader might have noticed also. The declaration was in all capital letters after all).

And you'd be quite right in saying that. In fact, I take it back: Web 2.0 is not dead. It has merely evolved into something that companies around the globe can finally understand: one of many tools that enable businesses to achieve goals. And a very important tool too. In the case of ACCR, Web 2.0 and social media become tools that enable businesses to listen to and engage with their customers. Businesses should do exactly the same using other means such as face-to-face conversations, good use of IP Contact Centers and so forth – but Web 2.0 enables customer engagement on a much larger scale than ever before.

So, again – I take it back. Web 2.0 is not dead but is evolving into something truly useful for businesses. With ACCR, it's fast becoming a cornerstone of Customer Care and will eventually take center stage in many other vital areas within businesses.