05 December 2016

Global retail banking IT spending on the rise - Ovum

13 January 2012  |  8081 views  |  0 cash

Despite ongoing economic turmoil, global spending on retail banking technology will increase by $3.6 billion - 3.2% - in 2012, and will hit $135 billion over the next five years, according to analyst house Ovum.

Asia Pacific will lead the way in growth, spending $10.2 billion in 2012, 8.3% up on the previous year. In contrast Western Europe will see the slowest growth, just 1.9%, although it is still the second biggest market, behind North America, spending $44 billion.

Ovum says that much of the spending is being driven by banks' determination to return to pre-recession revenue levels by investing in channel technology to boost customer trust and increase sales and servicing effectiveness.

Globally, online banking is expected to be the fastest growing area in 2012, with spending rising 5.3% to hit $8.3 billion by year end. Not far behind is the newer channel, mobile, where spending will rise five per cent, reaching $3.3 billion.

Retail banks will invest in these areas in parallel to investments in channel integration and customer information systems, an increase of 4.2% in 2012 globally, hitting $5.6 billion the same year.

This is due to the fact that 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, claims Ovum.

Another consequence of the economic crisis is increased spending on risk and compliance technology. Global spending on various middle-office components based on these technologies, such as risk management, anti-fraud, compliance, and performance management, will experience growth of 4.6%, hitting $6.1 billion by the end of 2012 and $7.6 billion over the next five years.

Regulatory demands are also forcing banks to invest in their core systems as they seek to find new business models. This will lead to an increase of core banking technology spending by 2.5% globally to reach $19 billion this year, and $22.5 billion over the five-year timeframe, predicts Ovum.

ING CEO Jan Hommen lent some credence to Ovum's assessment at a presentation to analysts in Holland today: "We need to move beyond simple cost cuts and focus on achieving true operational excellence, helping our customers obtain simple products through convenient and safe multi-channel access while at the same time streamlining our organisation and systems."

Procurement initiatives are expected to save EUR 300 million per year by 2015 but further structural efficiency improvements and IT investments will be needed to reach ING's long term cost-income ratio target of 50%, says Hommen.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Gartner lowers IT spending estimates; forecasts carnage in EU banking

Gartner lowers IT spending estimates; forecasts carnage in EU banking

06 January 2012  |  8967 views  |  1 comments
Financial services IT spending on the up - Bloomberg survey

Financial services IT spending on the up - Bloomberg survey

23 May 2011  |  7542 views  |  0 comments
UK finance sector IT spending to grow as industry recovers - CBI

UK finance sector IT spending to grow as industry recovers - CBI

04 April 2011  |  6973 views  |  0 comments
Retail banks still resisting social media - Ovum

Retail banks still resisting social media - Ovum

16 February 2011  |  12881 views  |  0 comments
Global financial IT spending set for rebound - Celent

Global financial IT spending set for rebound - Celent

28 January 2011  |  9225 views  |  0 comments
Global retail banking IT spending set for strong growth - Ovum

Global retail banking IT spending set for strong growth - Ovum

12 January 2011  |  8035 views  |  0 comments
Financial markets IT spending set for return to growth - Ovum

Financial markets IT spending set for return to growth - Ovum

16 November 2010  |  6659 views  |  1 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit contisgroup.comFind out moreVisit VocaLink.com

Top topics

Most viewed Most shared
Royal Mint to issue digital goldRoyal Mint to issue digital gold
6678 views comments | 23 tweets | 21 linkedin
Bank CEOs fret about ROI as startups drive IT arms raceBank CEOs fret about ROI as startups drive...
5832 views comments | 16 tweets | 21 linkedin
UK challenger bank Masthaven opens for businessUK challenger bank Masthaven opens for bus...
5774 views comments | 15 tweets | 13 linkedin
R3 and Calypso to develop blockchain trade confirmation systemR3 and Calypso to develop blockchain trade...
5636 views comments | 13 tweets | 12 linkedin
ING pulls plug on P2P payments app TwypING pulls plug on P2P payments app Twyp
5632 views comments | 16 tweets | 15 linkedin

Featured job

to Six-Figure Base, Commission, Benefits
London, UK

Find your next job