Overview 1
Catalyst 1
Summary 1
Key Messages 2
The CIS banking sector represents one of the highest revenue growth potentials worldwide 2
The political and economic turmoil triggered a strong wave of reforms 2
Major strategic transformation is on CIOs' agendas 2
The transformation will rely heavily on technology 2
Foreign technology vendors should form delivery partnerships with local IT services firms 3
Balanced focus on solutions that address cost reductions and revenue growth is needed 3
Table of Contents 4
Table of figures 5
Market Opportunity 6
The CIS needs to be recognized as one broad market with Moscow as the financial capital 6
Economic growth in the CIS is expected to accelerate in 2011 7
The CIS banking sector has one of the highest revenue growth potentials worldwide 7
A crisis in the banking sector exposed many institutional weaknesses 9
A wave of consolidation is approaching 13
Reformation is needed 15
There is still plenty of room for growth 15
Business Strategy Overview and Technology Implications 17
The financial crisis forces banks to cope with new challenges 17
Inefficient utilization of distribution networks and customer bases 17
Questionable quality of service (inheritance of the bureaucratic communist system) 17
Levels of productivity far below the Western standards 17
Underperforming risk management processes 18
Post-communist corporate cultures 18
Major strategic transformation on the agenda 18
Customer-centricity 18
Consolidation and centralization of functions 19
Risk management 19
The transformation will rely heavily on technology 20
The demand for technology is on the rise, driven by a major overhaul of core systems 20
Compliance and integration requires IT investments into back- and middle-office platforms 20
The payment business needs the technology to tackle fraud 21
Technology spending to grow at a healthy CAGR 8.3% (2008-2013) 21
Growing need for IT talent to support the transformation 23
Technology Market Overview 25
Compliance with local accounting standards have driven the emergence of local banking platforms 25
Growing significance of specialized payment technology vendors 26
Card payment technology is expected to be in strong demand 27
The financial crisis has highlighted underperforming data management practices 28
Focus on sales optimization requires specialized technologies 29
Branch technology needed to drive productivity and servicing 30
Online banking is an opportunity for smaller or specialized banks 31
Contact centers will remain an important remote channel, particularly for mid-tier banks 32
ATM investment on hold until 2010 32
The product vendor landscape remains largely dominated by local vendors 32
IT services increasingly targeted by foreign vendors 34
Go to Market 35
Foreign vendors should form delivery partnerships with local firms 35
Foreign vendors should focus on acquisitions to gain presence 35
Local support is a core requirement 35
A balanced focus on cost reduction and revenue growth is needed 35
Banks primarily focus on the price and strength of offerings when selecting a vendor 36
APPENDIX 37
Definitions 37
Methodology 37
Further reading 37
Ask the analyst 38
Datamonitor consulting 38
Disclaimer 38
List of Figures
Figure 1: The Commonwealth of Independent States 6
Figure 2: GDP growth projections through 2014, constant prices through 2014 7
Figure 3: Russia is expected to be among the fastest growing banking markets in terms of revenues 8
Figure 4: The Russian and CIS markets promise high profits from banking in long-term 9
Figure 5: RUB-USD exchange rate development 10
Figure 6: Overdue loans/total loans in the Russian banking sector 11
Figure 7: The funding gap significantly increased in the Russian financial sector 12
Figure 8: Russian banking system pre-tax income 12
Figure 9: Profit forecast for 2009 in the Russian banking sector 13
Figure 10: Dynamics of household insurable deposits in Russia and Ukraine, 2000-2008 14
Figure 11: Retail Banking technology CAGR through 2013, geographical view 22
Figure 12: Retail banking technology spending through 2013, business function view 23
Figure 13: The centralized settlement structure of the Russian payment system 26
Figure 14: Credit card market growth projections 28
Figure 15: VTB Bank's more rigorous approach to risk management and risk monitoring 29
Figure 16: The branch network of Sberbank, the largest bank in the CIS 31
Figure 17: Selected product vendors with footprint in the CIS banking sector 33
Figure 18: Selected IT services companies active in the CIS banking sector 34