IT outsourcing, business process outsourcing and offshore outsourcing make good economic sense. But there is a danger: if so many of an organisation’s skills are external, how will they grow the next generation of internal expertise? By Chris Skinner

Chris New, head of finance industry solutions at BT, talks to The Banker about the growth of the digital networked economy and the implications for the finance sector.

Retail banks are realising that effective customer service centres are a business generation tool that they cannot do without. Yet a recent survey finds service quality has improved little, says Remus Brett.

Retail banks promised their customers multi-channel access to their accounts many years ago, so why has this not progressed beyond the preserve of the wealthy? Angus Hislop reports.

Frances Maguire profiles JPMorgan Chase’s ITS division. Newly renamed and empowered in 2001, it is set to grow organically and inorganically. Peter Lighte, head of Europe and Asia, believes that “being joined at the hip to the investment banking sector” is the secret of success

External IT spending consumes 57% of total IT expenditure in the global financial services industry. TowerGroup expects IT budgets to shift further towards external IT spending, as internally developed legacy systems are replaced with third-party solutions. As outsourcing consumes a growing percentage of IT budgets, TowerGroup estimates that external IT spending will increase from 57% in 2004 to 59% by 2006 – seeing total IT spending grow globally from $198bn to $224bn.

The explosion of customer communication channels was intended to cut costs and increase efficiency. However, with cracks appearing in some systems and technology improving to allow face-to-face contact, banks may have to reverse their position on self-service. By Chris Skinner.