Retail banks want to target their marketing to customers more carefully, but are being held back by legacy IT systems, according to new research.

Nine out of 10 banks said that more targeted marketing would positively impact on sales, but seven out of 10 said they are struggling to keep up with the required changes in channel activity to meet customer demand.

Banks may have problems addressing the issue, said Ian Parkes, director at Coleman Parkes, who carried out the survey.

"With rumours that IT budgets will be amongst the hardest hit after the credit crunch, European retail banks may find themselves pressed to meet the consumer demand for personalisation," he said.

Banks cited poor flexibility (70 per cent); poor availability of customer data (66 per cent); and lack of channel integration (62 per cent) as their main reasons for not engaging with this need.

Many banks are so heavily regulated and concerned with the sensitivity of customer data, that they are not willing to take risks, said the study.

And 38 per cent of European consumers agreed that their banks were still too impersonal in communicating with them.

The research was sponsored by Xerox.