The report, based on interviews with chief information officers at leading global banks, revealed five dimensions of change that will characterize the industry over the next five to ten years: worldwide expansion, process efficiency, greater customer sophistication, emergence of new competition, and increased regulatory demands.

The need for transformation is being driven by a trend toward commoditization of transaction-based products, which is causing banks to leverage their most important asset—information. The maturity of transactional banking services will force banks "to understand customer profitability and risk more accurately," said Cece Sutton, head of retail banking at Wachovia Corp., in a statement.

Customer relationship management involves obtaining a single view of the customer via any channel—something that banks have wrested with for years. It also entails improving the look and feel of the bank branch; for example, Deutsche Bank's Branch of the Future initiative, due for completion in 2007, will include within its core infrastructure a redesigned Internet bank, CRM analytics, performance management tools, and advisory services.

Business-process management software is being used to reduce manual tasks in a number of processes, including customer service, application processing, and credit scoring, the report noted. In check processing, for example, the Check 21 law lets banks exchange images of checks in lieu of the original. Several large U.S. banks have begun the process of capturing images at the branch or ATM, and will begin exchanging images as soon as a critical mass of banks begins doing so. Workflow and document management technologies are being used to streamline the credit approval process.

Enterprise systems architecture is deemed critical to the transformation process. More than half of the survey respondents cited "service-oriented architecture" as the breakthrough technology in retail banking, and nearly all have implemented SOA. Enterprise architecture allows for greater linkage of internal and external applications, and for reusing services and data across an organization. The presence of a Web-based architecture frees banks from a reliance on legacy systems and also eases the systems integration task following mergers and acquisitions.