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North American bank IT spending to grow in 2009 - Celent

14 January 2009  |  13324 views  |  0 cash

Despite the economic gloom, spending by North American banks on IT will continue to grow in 2009, up 1.7% on 2008 to hit $50.3 billion, according to a report from Boston-based analyst Celent.

Growth will continue into 2010, albeit at a slighter lower rate of 1.3%.

Celent identifies several reasons for this, including necessary maintenance spending, outlay on integration work in the wake of numerous mergers, and growing investment in IT by small and midsize banks looking to gain market share.

The firm also highlights technology trends it expects to see dominate the North American market in 2009, lead by risk and Web 2.0 and mobile banking.

Unsurprisingly risk management is expected to be the top trend this year, as banks look to get more use out of their systems in the wake of the crisis. Banks will stop viewing risk technology as just a regulatory necessity and embrace it as a way of saving money.

Celent says the financial crisis exposed flaws associated with a siloed approach to risk and will force banks to improve linkage between units.

Web banking will also get investment as firms begin to realise they must improve customer interaction and experience through rich Internet applications and social networking features.

Celent says "bits and pieces" of Web 2.0 elements will appear this year but thinks it will be at least a year before cutting edge interactive online banking emerges.

Mobile banking will continue to gain momentum, although it will mainly focus on information services such as SMS text alerts.

Retail banking dominates technology spending in 2008, accounting for $31.5 billion, or 63.8%, of the region's total outlay. Wholesale banking comes in second with $12.3 billion expected to be spent by banks in 2008.

Although spending will grow, Jacob Jegher, senior analyst, banking group, Celent, warns that banks will need to be clever when allocating resources.

"IT dollars will be hard to come by after compliance/regulatory spending and maintenance expenditures. Banks will be forced to be creative with their funds in order to make investments go as far as possible," he says.

Earlier this week Celent warned that global IT spending by the financial services industry as a whole will slip 1.3% in 2009 to $353.3 billion.

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