Financial IT spending by Western European banks is set to grow at a compound annual growth rate of 4.8% over the next five years, according to research house Financial Insights.
The analyst group says spending will be driven by competitive challenges that are forcing banks to restructure their value chain to focus either on volume growth or customer proximity.
Daniele Bonfanti, program manager at Financial Insights says the consolidation process underway is changing the structure of the banking system.
"At the same time, banks are revising their way of doing business and reorganising their value chain," he says. "These elements will bring significant consequences for IT vendors, which will need to become real partners helping banks develop IT strategies that can create real value in an increasingly complex market."
Much of the increase in IT spending will be directed towards services and packaged software, he says. Major growth is expected in the capital markets segment and in the back-end to reach regulatory compliance.