The findings emerge from a Finextra Research survey of 58 senior IT decision-makers at retail financial institutions worldwide. Almost half of the respondents are expecting to raise their spending on technology in 2004, with the average size of the budgetary increase pegged at 30%. Only five per cent expect a smaller budget, indicating that the slowdown in technology spending may finally be coming to an end.

Alongside the cost reduction pressures familiar throughout the financial industry, retail finance firms are looking to new customer acquisition as a major driver of revenue growth. Banks are looking to an investment in Internet interactivity and branch renewal as their delivery channel priorities, with the call centre and other alternatives relegated to a secondary supporting or experimental role.

Spending on channels and customer facing technology is expected to swallow up almost half of the total IT budget for 2004, with IT infrastructure investment accounting for 36% and risk management/compliance mopping up the remaining 15%

Cause for celebration at the apparent revival in financial fortunes is mooted, however, as cost reduction pressures continue to exert a malign influence on IT staffing. At most retail finance firms, internal IT staff numbers will remain the same, but one-quarter of organisations will be downsizing their IT departments.

Both internal teams and external suppliers will get less in 2004 as a percentage of overall budgets, as more money is allocated to outsourced services.

The full report, Retail Finance Technology Strategies 2004, will be distributed at Finexpo 2003 - Retail Financial Technology on Tuesday 30 September, at the Victoria Park Plaza Hotel In London. Organised by Finextra Research, this annual one-day event comprises a seminar programme and an exhibition covering the most important IT and business issues facing senior executives from the retail financial services industry.