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    Home » News » Banks to spend more on IT, despite turmoil

    Banks to spend more on IT, despite turmoil

    By Editor16 January 2012
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    Worldwide spending on retail banking technology will increase by US$3,6bn, or 3,2% in 2012 and will reach $135bn in the next five years, according to Ovum. This is despite the economic problems plaguing the world economy.

    Ovum says banks in emerging economies in the Asia-Pacific region will grow the fastest, at a rate of 8,3% in 2012, reaching $10,2bn in IT spending by the end of the year. Meanwhile, Western Europe will have the lowest growth of all the regions (1,9%), despite being the second biggest market in terms of overall spend, reaching $44bn this year.

    “The technology investments will be driven mainly by the need to grow revenues, but changing regulatory compliance will also contribute significantly,” says Ovum financial services analyst Jaroslaw Knapik, the author of the forecast. “Returning revenues to pre-recession levels will be a priority for a number of institutions, as too will be the focus on improving customer trust and increasing sales and servicing effectiveness.”

    This will lead to accelerated investment in channel technology, predominantly online banking, which will become the fastest growing area globally in 2012, rising by 5,3%, to reach $8,3bn by year-end. Elsewhere, mobile will see an increase of 5% globally in 2012, reaching $3,3bn in spending, while management information systems and multichannel integration/customer information systems will also see high growth rates.

    “Technologies that allow ‘smarter’ selling and servicing, such as customer analytics and customer data management, are expected to remain hot areas in the near future,” says Knapik. “As sales activities are expected to be on the rise again, banks will also boost investments into operations as the ability to sell products faster and service customers’ better will continue to be a competitive differentiator in the retail market.”

    With risk and compliance permanently on the agendas of chief information officers, ever-increasing regulatory expenditure will drive investments into technologies that reduce costs, such as data management, business process management, business intelligence and analytics.

    Global spending in areas such as risk management, anti-fraud, compliance and performance management will experience growth of 4,6%, reaching $6,1bn by the end of 2012 and $7,6bn over the next five years. However, emerging economies in Asia-Pacific will experience the highest growth, at 8,8% to hit $521m by year end, although North America will grow the fastest by volume, an increase of $95m, reaching $2,2bn.

    “Regulatory demands are forcing banks to invest in their core systems. Though in many cases tight compliance timescales lead to the ‘quick-win’ type of enhancement strategies, the ongoing nature of regulatory demands, together with the need to revamp the wider bank to allow the adoption of newer business models, is now driving significant interest in core system transformation,” says Knapik.  — Staff reporter, TechCentral

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