External variables like the credit crisis are shaping the landscape of the banking industry – and there's not much banks can do about it, although they can use IT to turn these issues into business opportunities.

In the wake of economic and demographic shifts, 82% of European bankers feel that external factors such as the credit crisis will increasingly determine the future of their industry, more so than internal changes they can initiate.
The findings come from a new survey commissioned by SAP and conducted by Novametrie, polling leading banking officials and external industry observers – economists and academics – on the future of banking over the next 10 years in light of the current environment.
According to one respondent, "There is not much that we can do about it. [The crisis] will limit credit activity, limit growth and limit customer relationships."
Other key findings from the survey include:
* Half of all bank executives believe that the credit crisis is part of a long-term transformation of the industry;
* More than 70% of respondents identify growing customer sophistication, ongoing change in the financial markets, globalisation and competitive pressure as external catalysts for change in the industry;
* 19% identified IT utilisation as a success factor, even though many current banks run outdated, expensive and inflexible IT infrastructures. The limited emphasis given to business intelligence investments indicates that banks are not fully using the technology available to them to enhance customer care and turn these
catalysts into business opportunities;
* Banks are aware of the need to adapt; with more than 85% of respondents listing distribution channels and customer relationships as key investments by today's banks; and
* Management competence was identified as the most important internal success factor by 41% of the bankers interviewed.
"The overall impression from this survey is that banks are not creating their own destinies," says Arnoud De Meyer, director of the Judge Business School at Cambridge University, one of many industry observers polled. "They see themselves as victims of the crisis, and are willing to let the current state of the industry determine where they go from here, not where they envision themselves to be 10 to 20 years from now. The future of this industry will remain scattered if they allow themselves to be blown like leaves in the prevailing winds."
Current investments by banks, the survey found, tend to be short-sighted. They are aimed at retaining marketshare in the present, with a limited long-term structure in place to grow their business.
For example, banking respondents understand the rise of a new generation of customers that are not attached to any traditional banking model. One is a youthful niche of customers who are using new channels such as the Internet and mobile technology as their primary banking conduits. Additional customers segments are being carved out through changing demographic shifts among the elderly and immigrants.
However, according to the outside experts surveyed, banks are not laying enough of a foundation to capture these emerging niches. Several observers noted that banks are more focused on the internal needs of their businesses rather than developing an understanding of customers that would spur more variety and flexibility in standard services and IT infrastructure.
As one respondent states: "Banks talk about being customer-centric, but they are not."
Johan Kestens, senior vice president, line of business financial services, SAP AG, comments: "What makes this survey so important for banks is that it provides that outside perspective that you can't get from the echo chamber of your industry peers.
"In this case, it revealed a holding pattern where banks are just doing enough to keep their heads above water. They need to start thinking more strategically in order to take advantage of the opportunities that are knocking on their door."
Distilling the suggestions and comments captured by the survey, as well as having industry knowledge, SAP believes banks could reassess their investments in nine key areas:
* Customer management should be the overarching long-time focus of banks;
* Integration of distribution channels;
* Risk management protection for all involved stakeholders;
* Business processes that are automated and standardised across the enterprise, empowering business intelligence tools;
* Adopting outsourcing and insourcing strategies;
* Meta-management of business knowledge involving reporting transparency, regulation and compliance;
* Creating a visible and tangible corporate social responsibility platform;
* Incorporating talented, knowledgeable personnel within all enterprise levels, acting as agents of change; and
* Brand management to restore credibility lost during the crisis.