Top global banks to spend $183bn on IT in 2006 - TowerGroup
In 2006, TowerGroup believes the success of the global banking industry will be based upon its ability to respond more quickly to external forces as it works to overcome endemic challenges such as an ossified technology footprint, ingrained cultural biases against change, and the inexorable movement toward commoditisation.
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The past few years have seen the retail banking lines of diversified financial institutions in the driver's seat as the engines of growth and merger activity. In the current global banking environment, revenue streams are becoming more balanced. While strong revenue is still being driven by retail banking, there has also been good momentum in wholesale banking as well as in asset and wealth management. But in 2006, banks will be challenged to continue these positive revenue trends, as traditionally, the industry has been slow to change and adapt to new customer demands and new regulations.
As a result, TowerGroup believes that continued revenue growth will be fueled by a bank's ability to improve connections with customers, partners and also across internal business lines. The year ahead will see the global banking industry devote a great deal of time to creating a more "responsive" environment through investments in improved connections with customers, partners and internal groups. TowerGroup also expects to see continued investment in technology, with the top global banks spending close to $183 billion (USD) in 2006. The most aggressive top-line growth in IT spending will come from banks in the Asia-Pacific region, as the Chinese market continues to develop and global firms increase their Asian footprints.
Looking further out, leading banks will use their ability to respond quickly to build more beneficial partnerships, assume control over broader markets, and establish brand dominance. Ultimately, TowerGroup believes the global banking market will be left to one of two groups: those that demonstrate the mastery of the integrated financial institution and those that don't have to because of specialisation in one market or product.