Banks see investment in business intelligence and analytics technology as a greater priority than security as they use IT to achieve business benefit from mature online and mobile banking services.
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According to research from Ovum, business intelligence and analytics was ranked as a top IT theme by 29% of banks, which put it slightly ahead of security at 28%.
“Although security will always be a priority for banks, the role of business intelligence and analytics has emerged as a critical area for 2015,” said Ovum.
“With many markets witnessing the second or third wave of online and mobile platforms, enabling self-servicing and integration with the wider channel estate are becoming secondary to the need to drive revenue. The ability to use data analytics in near real time to deliver customised and highly contextualised marketing messages, offer management, and other communications, will be the key differentiator in the next round of major platform developments,” it said.
The latest figures from Ovum revealed that banks will increase IT spending by 43% in 2015 compared with 2014. The $131bn spending in 2015 will increase to $157.6bn by 2019, said Ovum.
Based on recent interviews, Ovum said two-thirds of 582 retail banking institutions plan to increase their IT budget in 2015. One in five of these banks are planning growth of more than 6% compared with last year.
The analyst firm said spending increases will be felt across most aspects of bank activity, but online and mobile will be a top investment area.
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“Mobile banking was ranked by survey respondents as a top-three IT priority, and it is the area where the biggest net planned increase in budgets is expected,” said Ovum.
Ovum said IT must get involved in this, and not just to provide services, but to innovate. “With retail banking firmly in growth mode, the need for innovation is stronger than ever. Many of the current disruptive forces in the industry, such as mobile, social media and as-a-service delivery are IT-centric at their heart,” it stated.
“Executives should look to IT to take a leadership role in assessing and responding to the impact of these changes. IT executives must continue to drive exceptional service delivery, but their roles will change to become innovation partners with product and strategy groups.”
But modernising customer-facing service focus must not mean IT leaders taking their eyes off the legacy IT.
“In the rush to deliver product innovation in the front office to drive growth, banks must resist the temptation of short-term, siloed developments that deliver quick revenue wins. Customer expectations will continue to evolve, and banks must build and retain agility in the back office to deliver the innovations needed in the future,” the research report said.
Banks now face a new pressure in the form of competition. Regulatory changes and government backing is seeing a group of new challenger banks emerge, as well as IT companies moving into areas dominated by banks.
These new banks and technology companies have an advantage in IT terms because they don’t have legacy IT, which often hold banks back when it comes to keeping up with customer demand.
Recent research from Celent revealed that European banks will spend £46bn on IT in 2017, with a large proportion of this sum being invested in new technology as the industry is transformed by competition.
In 2014, European banks spent £40.79bn on IT, but will spend £42.23bn in 2015, rising to £46bn in 2017, according to the research. Retail banks are the biggest spenders, with £18.5bn expected to be spent on IT in 2017.