U.K. Banks Modernize to Meet Regulatory, Market Demands

Rapid changes in technologies, consumer choices and laws kick off transformations across the banking industry, ISG Provider Lens™ report says

LONDON, December 01, 2022--(BUSINESS WIRE)--Banks in the U.K. are carrying out large-scale technology transformations in response to evolving regulations, changing customer expectations and the emergence of new innovations and competitors, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2022 ISG Provider Lens™ Digital Banking Services report for the U.K. finds that banks need to do business in new ways as more consumers turn to online and mobile forms of banking, especially in the wake of the COVID-19 pandemic. Rising competition from FinTech startups and other non-bank alternatives offering retail banking, loans, embedded finance offerings and securities trading has also made digital transformation a greater imperative.

"The ongoing wave of disruption in the banking industry, coupled with changing U.K. banking regulations, have set the stage for major modernization projects at both domestic and global banks in the U.K.," said Owen Wheatley, lead partner, banking and financial services at ISG. "Legacy core banking platforms need to evolve and transform quickly."

To meet new market and legal requirements, banks in the U.K. increasingly are taking advantage of new technologies, including AI, machine learning, robotic process automation (RPA), natural language processing (NLP), intelligent automation and analytics, ISG says. These tools enable capabilities that benefit both internal operations and customer experience.

The need to comply with new regulations is also driving U.K. banks to modernize their systems and introduce new features. Among other concerns, banks need to implement solutions to comply with Basel 3.1 regulations on capital frameworks and risk, new rules on operational resilience against future events like the pandemic, and Payment Services Directive 2 (PSD2), covering customer security and integration of APIs through open banking frameworks. Banks also need to comply with tighter rules on detecting and reporting financial crime and money-laundering, a rising concern as geopolitical issues generate more international sanctions.

U.K. banks are updating their technology around payments and card processing to meet consumers’ demands for new features that give them more options, the report says. Real-time payments, embedded finance (buy now, pay later), digitalized cards and payment-as-a-service, plus greater monetization of data about payments, require the transformation of legacy banking platforms.

"Non-bank players are changing the game for many consumers," said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. "Service providers can help traditional banks update their technology to compete and enter new segments."

The report also explores a range of other issues facing banks in the U.K., including the emergence of digital currencies and cryptocurrencies and the role of banks in financing and facilitating transitions to net-zero emissions.

The 2022 ISG Provider Lens™ Digital Banking Services report for the U.K. evaluates the capabilities of 26 providers across four quadrants: Core Modernization and Integration Services, Technology Transformational Services for Digital Banking, Banking Governance, Risk and Compliance Services, and Payment and Card Processing Services.

The report names Accenture, Capgemini, Cognizant, HCLTech, Infosys, TCS and Wipro as Leaders in all four quadrants. It names Deloitte as a Leader in three quadrants and Atos, IBM and LTI as Leaders in one quadrant each.

In addition, LTI is named as a Rising Star — a company with a "promising portfolio" and "high future potential" by ISG’s definition — in three quadrants. FIS is named as a Rising Star in two quadrants.

A customized version of the report is available from Capgemini.

The 2022 ISG Provider Lens™ Digital Banking Services report for the U.K. is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 800 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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Contacts

Will Thoretz, ISG
+1 203 517 3119
will.thoretz@isg-one.com

Kate Hartley, Carrot Communications for ISG
+44 (0)20 3457 6403
kate.hartley@carrotcomms.co.uk