North American bank IT spending set for modest growth - Celent

Spending on IT by banks in North American will rise at a steady clip over the next two years after a rocky 2012, according to Celent.

According to the research house, banks in the region will fork out US$56.9 billion on technology in 2013, four per cent up on the US$54.7 billion spent last year. In 2014 the rate of growth will accelerate slightly, up another 4.4%, to $59.4 billion.

This represents an improvement on the 2.4% rise in 2012 and Celent's own prediction a year ago that 2013 growth would be just 2.9%.

In its report, Celent points to encouraging growth in retail banking spending while digital channels and payments have strong funding and new investment is creeping up.

With that said, it's not all smooth sailing; wholesale banking spending growth rates will be lower than those of the last few years, and compliance, regulation, and maintenance are still tying up much of IT budgets.

Jacob Jegher, senior analyst, banking group, Celent, says: "Banks are still unable to escape the maintenance conundrum, but fortunately the allocation to new investments is on the rise. Most banks are chipping away at a laundry list of enhancements and strategic initiatives that they would like to take on."

Channels

Regulation & Compliance Retail banking Payments Wholesale banking

Keywords

Mobile & online banking Research/analysis

Comments: (2)

Derek Britton - Micro Focus - Newbury 11 January, 2013, 08:49

Be the first to give this comment the thumbs up

0 likes

While it is encouraging to see predictions of modest growth in IT spend in the medium term, it is no surprise to read the comment that a lot of that expenditure will be earmarked for lights-on and regulatory or compliance activities.

Analysts and commentators are united in the view that "IT Debt" (the cost of the backlog of unfulfilled requirements) and growing burden of legislative and regulatory compliance (especially in financial services) will continue to hamper innovation initiatives. And yet a more technically aware market and customer base is demanding more and more innovative service.

CIOs are faced with the challenge of steering a course of smart IT investment that tackles those 3 seemingly mutually-exclusive forces of IT Debt, Compliance and New (Disruptive) Technology. Solutions at the intersection of these challenges which can demonstrate value across more than a single area will need to be scrutinised further.