Global retail bank IT spending is tipped to hit $152.5 billion by 2018 as banks worldwide focus on digital delivery channel investment to attract customers, according to research by analyst grouop Ovum.
The shift towards business expansion strategies is most visible in emerging markets and North America, says Ovum, with signs of recovery also evident in Western Europe as the region emerges from the sovereign debt crisis.
As a result, Western Europe (forecast to reach $43.6bn in 2018) and North America (at $59.3bn in 2018) will remain the largest markets for tech spending, growing at 2.9 percent and 4.8 percent, respectively, in the next five years.
Emerging Asia-Pacific markets are expected to grow at the fastest rate (7.7%), mirroring the economic development in the region and the expected financial strength of the consumer. The total annual spend in this region is expected to reach $16.8bn by the end of 2018.
Business development is a priority for a number of retail banks, with IT spending in this area forecast to reach US$13.6bn by the end of 2018. Online banking will see an uplift in budget allocation (6.4 percent growth in 2014, reaching $10bn by 2018), with other digital channels, such as mobile, growing even faster.
Jaroslaw Knapik, senior analyst, financial services technology, Ovum, says: "The renewed focus on business development is driving distribution channel IT investments, and should go a long way towards fuelling innovation in how banking services are delivered over the next four years."
At the same time, operational budgets will feel the impact of compliance requirements, he says, which will translate into middle- and back-office transformation expenditure driving higher IT spending.