Brigida Soriano - Fotolia
Bank IT spending to hit $241bn across four major global regions
IT spending across four major economic regions will increase by around 4% in 2016, but Europe is the least certain
Banks in North America, Europe, Asia-Pacific and Latin America will together spend $241bn on IT in 2016, with an overall increase of almost 4% compared with 2015, according to analyst company Celent. However, Europe is the least certain region, with potential pressure on IT budgets.
The 2016 growth figure of 3.9% for the average spending increase across regions is short of Celent’s prediction, made in 2015, that spending would grow by 4.4% in 2016.
Celent now predicts that bank IT spending in these regions will grow by 4% and 4.3% in 2017 and 2018 respectively.
In Europe, economic uncertainty and increased regulation could put pressure on IT budgets, according to Celent banking group's senior analyst in Europe, Gareth Lodge.
“The headline numbers for Europe show that IT spending is expected to grow across all businesses,” he said. “However, more countries seem to be faltering in their economic growth.
“Whilst not in decline, combined with the increasing regulatory burden, many banks are starting to find it tough going, with pressure on both costs and revenue. This will affect overall IT spending growth.”
Meanwhile in North America, Celent analyst Stephen Greer reckons retail and wholesale banks will steadily increase the amount of money spent on technology.
He added that modernisation is taking place at the front, middle and back, with middleware integration to connect systems. “As a result, new investment spending is growing at a moderate yet consistent pace as these institutions invest resources into new initiatives,” said Greer.
Read more about IT spending in finance sector
- European banks will spend £46bn on IT in 2017, with a large proportion of this being invested in new technology
- Deutsche Bank is spending up to €1bn on digital technology over the next three to five years following the modernisation of its core banking platform
- Video banking is set to take off over the next few years to improve the personal connection between banks and customers, according to research
Intense competition in Asia is driving IT spending at banks, according to Celent analyst Hua Zhang.
“The banking sector in this region is especially dynamic because of new players – such as internet firms – and new banking regulations,” he said. “Asian banks must continue to update their business models to adapt to new regulations and reforms, and employ innovative technologies to deliver maximum protection, value and satisfaction to their Asian customers.”
In Latin America, years of economic growth have changed the economic, social and political context in countries such as Brazil – which is changing the demands on banks.
Celent analyst in the region, Juan Mazzini, said: “Customer expectations are changing among young, digitally savvy consumers, and the next one to five years will be a watershed period for digital banking.
“Banks are working to become more efficient and agile while transforming into the bank of the future,” he added. “To execute their plans, banks will continue to invest in IT.”