The report predicts that despite the current recessionary environment in the USA, banks will spend over $34 billion on technology in 2002. Celent suggests top banks are spending in excess of $2 billion each annually on technology, with the largest bank reaching a spending level of $5 billion in 2002.

The figures chime with the results of a recent Gartner/SoundView survey of IT executives which forecast a five per cent increase in technology spending in the financial sector. According to the survey results, vendors in the security, storage, Web-based applications, PDA and Web integration services arenas are most likely to attract new spending in 2002. Mainframe, contract labour services and desktop products and services are low on the priority list

Octavio Marenzi, managing director at Celent, notes: "A very large proportion of their spending is on maintaining existing infrastructure. However, banks are also increasingly viewing technology as a competitive differentiator, as a tool with which to wrest market share from their competition."

The Celent report points to consolidation in the banking industry as a key driver of increased spending on IT. According to Octavio Marenzi this is because larger banks do not only spend more on IT than smaller institutions, they spend a greater percentage overall.

"The largest commercial banks in the USA spend as much as 25% of their total expenses on IT, with certain specialist banks spending even higher percentages. Small banks tend to spend a far lower percentage of their total expenses on technology," says Marenzi.