As we approach the second half of the year, banks are continuing to shift their IT and marketing budgets to focus on improving and differentiating the customer experience. Consumers are demanding more convenience from their banks, who are responding by expanding channel choices and offering differentiated services that attract these fickle clients. For existing clients, banks are investing in technologies to cross-sell, deepen relationships and reduce customer attrition as part of a larger customer journey initiative. I thought the insights provided by Penny Crosman in her December 2013 article, "Top 8 Ways Banks Will Spend Their 2014 IT Budgets" did a very nice job of highlighting how IT departments will invest to support these initiatives. I wanted to comment on a few of her points to add color with what I'm seeing.

Digital Banking and Mobile Payments-Unsurprisingly, there continues to be a strong migration towards the mobile banking channel. Digital wallets, mobile banking, and tablet applications for consumer and small businesses are creating more engaging experiences and enabling more complex transactions. As mentioned in the article, banks will spend 6.8 percent more on digital banking in 2014 than they did in 2013. Creating a more engaging and personalized experience in the mobile channel will be critical. Mobile banking is becoming the cornerstone to an Omnichannel strategy, so as banks continue to build their strategy, it's important to focus on enabling easy escalation from self-service transactions to assisted interactions, creating a more engaging customer experience.

Marketing Analytics-I continue to see banks wrestling with data access and making that data actionable. The ever increasing amount of real-time customer data and the need to predict customer desires requires the complex task of merging traditional in-house data sources with those outside the bank. Integrated data platforms that can query both internal and external data sources in a unified fashion are a necessity. Real-time targeting and decision making can be greatly enhanced with data virtualization tools such as those offered by Cisco's Composite Software and SocialMiner.

Omnichannel Strategy-An Omnichannel strategy offers more seamless, synchronized interactions across channels, engaging customers in insightful conversations and optimizing service. This requires customer centricity, leading to additional sources of revenues and profit. While everyone is talking about Omnichannel, few truly understand the short and long-term roadmaps necessary to accomplish this, along with the need to have both the lines of business and IT heavily involved in that process. The architectural and process implications are tremendous. Constructing an appropriate roadmap will ensure an outstanding customer experience and prevent a very costly re-engineering process down the road.

Private Clouds-The cloud environment allows centralized sharing of documents and the delivery of applications on demand. However, banks are leery to outsource confidential customer data to a public cloud, opting for a private cloud instead. In most cases, US banks have disparate back-end computing systems which do not easily integrate into a cloud infrastructure. Cisco offers its Domain Ten Framework to help customers assess their current data needs, simplify the data center and understand the benefits of cloud transformation. Utilizing Cisco? InterCloud, customers can now build secure hybrid clouds and extend their existing data centers to public clouds as needed on demand.

Security-Cyber security will obviously continue to have a significant impact on budgets. A few areas that Cisco has industry leading solutions:

• Managed Threat Defense-An on-premises solution that applies real-time, predictive analytics to detect attacks and protect against advanced malware across customers' extended networks. This solution includes Sourcefire FirePOWER for threat detection, delivering a flexible, enterprise security architecture with the capability to expand and run varied and diverse security functions.
• Device Authentication-Cisco's Security Agent can help store user credentials and prevent them from being copied or stolen to another device. Device authentication creates a strong binding between the app, the device and the user, ensuring that the app will run only on the installed device, and only on behalf of the authenticated user.
• Application Tamper Resistance-The agent provides a security envelope for the application, protecting it from malicious users and malware... wrapping server communication in cryptographic, secure channels.

Compliance and Risk-The highly escalating cost of compliance over the past few years has had a significant impact on budgets across all lines of business. Modeling for credit risk, liquidity risk and capital adequacy provide the foundational infrastructure needed to improve analytics applications. Banks are now focused on being able to leverage investments they have made for risk and compliance to generate business benefits. As banks struggle to gather relevant data from disparate systems, positioning data virtualization software can improve compliance efficiency and accelerate the use of the data and analytics.

We see that IT spending in 2014 and beyond is increasing. Meeting customer expectations and enhancing their experience, all while promoting operational efficiency, will be the difficult balancing act.

Is your bank in need of an IT makeover? To learn more about Cisco offerings for financial services and how we can help with your IT department's needs, visit Cisco Financial Services.