Asia Pacific banks to increase IT spending, despite crunch

Asia Pacific banks to increase IT spending, despite crunch

Despite the global economic gloom, over two thirds of banks in Asia Pacific expect to increase spending on technology in 2009, according to research from Financial Insights.

A poll of 68 bank chief information officers (CIOs) and senior IT decision makers in the region found that 69% expect to increase investments in technology in 2009. Around 16% said their IT budget will remain static, while 15% expect a decrease in fintech investments.

Michael Araneta, senior research manager, Financial Insights Asia Pacific, says IT initiatives that ensure the availability and performance of a bank's existing technology infrastructure will be a key area of focus and will be "where significant IT dollars are being spent".

"There is a growing focus on platform standardisation, security and counter-cyclical solutions such as risk technologies, collections and recovery systems, credit scoring systems, and portfolio and exposure analytics," says Araneta.

But the increased investment will be accompanied by greater scrutiny of IT budgets, with discretionary spending cut, especially on telecommunications and contract staff hiring.

"Clearly, cost management has quickly risen to the top of the agenda," says Araneta. "We see this in banks' intentions to closely scrutinize where investments are being made, and to more thoroughly define the intended benefits of IT projects."

Financial Insights also says projects crossing multiple technology and business areas have been put on hold because banks are reluctant to embark on long term, strategic and business-wide programmes.

However vendors are responding to the credit crunch and its impact on bank budgets by changing the structure of contracts, says Financial Insights. Services are converting headcount-linked contracts to fixed-price deals and payments are being staggered over longer periods.

Vendors are also making their "A-teams" available for projects in the region as business dries up in Europe and North America, so Asia Pacific banks are getting better value for money, says Financial Insights.

Nearly half of US and European financial services firms have cut their technology budgets this year due to the economic crisis, according to a separate survey last month from Forrester Research.

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