Global information technology spending by financial services institutions stands at US$317.7 billion, an eight per cent increase over 2005, according to the latest research from Celent.
But although the US economic forecast is relatively upbeat, the growth in IT spending by financial services firms is expected to curtail starting in 2007, says Celent. Firms are expected to spend US$351.2 billion on global IT products and services in 2008, or a growth rate of 5.1% per annum.
Banks in the Asia Pacific region are expected to increase their investments in IT at a significantly faster rate compared to firms in other parts of the world from 2006 to 2008, a compound annual growth rate of 11.4%.
Banks have invested heavily in IT for some years, says Celent, and it is starting to pay off. The research shows that banks continue to invest in maintenance rather than in new investments, with almost three quarters (74.5%) of IT investments made in maintenance.
But banks will invest a larger portion in new investments in 2007 and 2008, partly for system upgrades.
Louise Westerlind, analyst in the institutional securities and investments group at Celent, says: "As the 'new investment initiatives' tally can tell, financial services institutions worldwide are keen to spend money to replace old systems, thus reducing IT maintenance expenses."