At least 67% of bank IT budgets are still being spent on maintenance and compliance rather than transformative projects that can create value, according to research conducted by Finextra on behalf of CSC.
The study, Redress the Balance: How can IT leaders stop spending too much on 'Running the bank' and start spending more on 'Changing the bank'?, analysed findings from 91 responses from 55 different financial organisations in 24 countries. The research found that banks realise that when IT budgets are mainly spent on maintenance and compliance, few resources are left to dedicate to transformative projects that could improve innovation and competitiveness in the market. Efficiency in operations is an obvious route to finding additional funds to redress that balance.
According to Mike Steinharter, VP, Banking & Capital Markets, CSC: "The results confirm the challenges banks are facing today, particularly around improving operational efficiency. Capital requirements have become more stringent, and the regulatory burden is increasing costs across all areas of financial institutions, not least IT budgets."
According to the study, the current largest enterprise IT projects within banks are most commonly platform consolidation, making use of converged infrastructure systems, and core application upgrades, with a mix of in-house development and vendor software. While the owner-operator mindset is still somewhat entrenched, there is a growing use of managed services, utilities and new partnership banks.
In addition the study found that 75% of banks are already taking a steady, sustained approach to achieving operational efficiency and cost reduction, rather than short-term cyclical measure.
This report from Finextra, with CSC, is aimed at banking IT leaders focussed on shifting the ‘run the bank, change the bank’ ratio.
You can download the full report here.