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Profitability Analytics – Growing in Adversity

Profitability Analytics – Growing in Adversity

Aite Group’s research reveals that spending on profitability analytics is growing as U.S. banks face increased margin compression. U.S. bank spending will climb to over US$380 million by 2010, up US$120 million from 2006.
By Randi Purchia

Boston, MA, December 7, 2006 – According to new research, Aite Group estimates that as U.S. banks face continued margin pressure, spending on profitability analytics will grow 10% annually. Much of the spending is already being fueled by software re-deployments at large banks. This report provides a market overview of the drivers and trends of profitability analytics solutions, and it profiles and compares leading technology vendors.

Among other findings, the report reveals that profitability analytics penetration among U.S. banks is quite uneven: While 70% of U.S. Tier 1 banks already have profitability analytics solutions, only 27% of Tier 2 banks, 15% of Tier 3 banks, and 5% of Tier 4 banks have adopted them. As difficult as penetration of the midsize and smaller bank market has been, Aite Group, nevertheless, anticipates relatively strong growth as more CEOs recognize the proven ROI of these solutions. Component offerings, better multi-dimensional databases, faster engines, and better data warehouse access all favor greater penetration.

Nine profitability analytics vendors were given Aite Group Awards:

• Oracle was given the "Superior Querying and Reporting Capabilities Award for banks with over US$10 billion" for the ease and strength of its querying capabilities and the quality of its graphical display.

• Reveleus (an i-flex company) was selected for "The Marketers Choice Award for banks with over US$10 billion in assets".

• Jack Henry & Associates (RPM) was given "The Premier Small-Bank Solution Award for banks with US$100 million to US$10 billion in assets" for its rich solution set, low cost, and ease of implementation.

• Fair Isaac was given the "Actionable Intelligence for banks with over US$100 million in assets" for its predictive, proven, tactical-focused models.

• Harland Financial Solutions and Metavante were selected as the "Best Marketing Solutions for banks with US$100 million to US$10 billion in assets" for their lower cost and their marketing focus.

• CorePROFIT was awarded "Easiest to Implement Solution Award for banks with US$100 million to US$10 billion in assets". This solution is a good fit for banks that are looking for tangible results without protracted deployment times.

• NCR was given the "Superior Open Architecture and Analytics Award for banks with over US$10 billion in assets" for its flexibility and adaptability.

• "The Superior, In-Depth, Multi-Dimensional Solution Award for banks with over US$1 billion in assets" was given to SunGard (BancWare) for the depth of insight it provides into operations and the complexities of banking.

According to Randi Purchia, Senior Analyst at Aite Group and the author of the report, "While the ROI on profitability analytics has been proven to be substantial, many banks still struggle to find sufficient resources and champions to integrate its value deep into the organization - to the front lines, across lines of business, into customer management processes, and to strategic planning groups and boardrooms where its output could have the greatest impact."

The report compares and profiles 10 vendors, including CorePROFIT, Fair Isaac, Harland Financial Solutions, Jack Henry & Associates (Relationship Profitability Management), IPS-Sendero (FISERV), Metavante, NCR, Reveleus (an i-flex company), Oracle, and SunGard (BancWare).

This 79-page Impact Report contains 2 charts and 47 tables. Clients of Aite Group's Retail Banking and Wholesale Banking services can download the report.