In the Financial Services and Retail sectors, e-commerce will experience continued growth.  However, it is vital that e-commerce, in the form of websites, are closely and fully integrated within total retail or financial services offerings, so that online transactions become significant.  The Office of National Statistics has estimated that 13.9 million households, or 57% of households in Great Britain had internet access at home, while of these households 72.6% had a broadband connection.  This significant penetration of the market by broadband will facilitate online shopping by consumers with an associated marked growth in e-tailing.  With online sales for Christmas 2007 expected to hit a record of £10billion, retailers and financial service providers have noted the trend for consumers to favour the Customer insight e-commerce environment.  The year ahead will witness increased awareness of the need for enhanced security within e-commerce with a more widespread adoption of industry standards such as Verified by Visa and MasterCard SecureCode™.

The year ahead will be all about maximising customer convenience – working on increasing the ease and speed for shopping as well as the smoothness of service through the use of unattended, kiosk and self-service check-outs. We expect multi-lane self-service check-outs to appear in the outlets of most major retailers, and for customers to increase their use of vending machines for purchasing commodity items such as CDs or DVDs using credit or debit cards.  The introduction of contactless payment cards and technology will be key to this trend.  After a successful trial of contactless payments in central London, a planned nationwide roll-out will inevitably follow in 2008.

Back to top^

MasterCard has extended its grace period for PCI DSS compliance to 30 June 2007.  We estimate that only a few customers will have achieved compliance by this agreed deadline.  Our prediction is that the focus on compliance will act as a catalyst and driver for companies looking to migrate to managed service payment solutions.

Back to top^

Targeted marketing will get significantly more refined in the year ahead.  Improved technology will enable the reshaping of business models and bring peripheral or new solutions into play, in a bid to drive customer insight, retention, reactivation and eCRM programmes.  For the first time, data-driven marketing could become a commercial reality.  Dynamic and recent data which reveals actual behaviour so that key buying triggers can be exploited as they happen, with relevant data that threads through an entire marketing programme: this is the context in which transactional data will flourish. Ultimately, this data will facilitate greater understanding of customers as individuals, enabling the introduction of more specific and appropriate marketing initiatives which are highly targeted.  Mass marketing will become less prevalent, replaced instead by one-to-one marketing.

Back to top^

The migration from X.25 to IP networks by businesses will create significant cost savings, as companies enjoy the benefits offered by IP. Moreover, this particular network will pave the way for neo-futuristic innovation by retailers, re-imagining and re-presenting their environment for customers; implementing ground-breaking means of disseminating key messages to their customers; and improving security and preventing fraud. Shrinkage is an ongoing headache for retailers who lose thousands of pounds a year as a result of internal theft by employers.  The European Retail Theft Barometer, commissioned by Checkpoint Systems and published in September 2006, reported that shrinkage cost the retail industry €29 billion in 2006, with goods stolen by employees on the increase.  Internal theft is rising and retailers are wising up to this new issue. Storage areas should always be protected and the point-of-sale (PoS) area is now generally monitored through transactional data in addition to surveillance cameras.  Such systems, integrated with IPCCTV high-pixel security cameras, innovative PoS solutions, sophisticated tags and high quality antennae, help to reduce a retailer's shrinkage, both internally and externally. Large-scale losses also tend to occur from refunds, voids and other transactions incorrectly put through the till which can be theft, or could just be issues with staff training. All transactions can now be monitored through intelligent software solutions that analyse all the security information together and highlight potential areas of concern, including theft and opportunities for operational improvement.  IP networks can also be used for highly targeted, relevant and timely in-store advertising.  In essence, in selecting to migrate to this network, customers will be signing up to an option, the added benefits and value of which will only multiply.

Back to top^

In the year ahead, loyalty programmes will experience a change in emphasis with their focus and raison d’etre metamorphosing from being simply about the redemption of points and rewards to a recognised sophisticated tool for understanding a customer base with precision, clarity and effectiveness.  Retailers and service providers will increasingly develop their business and marketing strategies around the commercial intelligence provided by next generation loyalty programmes.

Back to top^

Gift card centres or malls – the designated display units of other businesses’ gift cards - will consolidate their success and popularity, with increased penetration and market presence in the UK.  Sales from gift card centres are likely to increase: they offer the merchant the chance to create a brand new product line in their outlets; moreover, the merchant selling the gift card usually receives commission on the value of the sale – payment which the issuer of the card sees as a fair price for gaining access to new customers.  Associated business opportunities created by the centres, such as websites offering gift card swapping and buy back services will also increase their presence.  Echoing the business patterns and precedents established in the US, we expect to see gift card centres appearing in other large supermarket chains and high street retail outlets. 

Back to top^

IT strategy and consulting will come increasingly to the fore in 2007, as businesses look to align their IT strategy with their corporate strategy.  In its 2006 survey on IT strategy, the National Computer Centre (NCC) found that  95% of respondents described ‘maintaining and developing the IT infrastructure’ as a major role of the IT function, but only 34% cited ‘identifying and engineering change in business processes.’  Currently, only organisations with an aggressive pace of IT adoption can see the potential synergy and correlation between IT and corporate strategy in helping to identify, engineer and drive change in business practices, and ensure that IT projects deliver business benefits.  The year ahead, however, will witness the more widespread acknowledgement for, and take up of IT services architecture strategy: identifying where a company’s IT is at the moment; where it needs to be in three years’ time, in order to fulfil and deliver business goals; and mapping the journey that needs to be taken to attain that aspiration, linking it closely with definite triggers for change.  Effectively, IT strategy will be considered as a driver for gaining competitive advantage.

Back to top^

The coverage for purchasing cards will increase in the year ahead.  In particular, the business benefits of purchasing cards will mean that they are adopted across more industry sectors, and especially in the public sector.

Back to top^

For hospitality, the use of wireless payment devices will become more widespread within this industry sector in the year ahead. 

Back to top^

Outsourcing will continue to grow.  Increasingly, companies are recognising that outsourcing their IT infrastructure is enabling them to focus on their core business.  More and more businesses are looking for suitable partners to advise them at a high level and to take away the pain of implementing outsourcing.  The identifiable trend for outsourcing is set to continue.

Back to top^

Insight is another key area which will be taken up more widely throughout 2007, with companies recognising the extra value that they can gain from the data on their customers that they already hold, resulting in improved business performance.

Back to top^