Singapore and Indonesia stand out for IT spend in Apac banking sector

Singapore is the top spender on IT for banking of all developed economies in the Apac region, while Indonesia has the fastest growth rate in IT spending

Singapore’s banking and securities industry will have the highest growth in IT spend among developed economies in Asia-Pacific in 2017, while Indonesia will have the highest overall growth rate in the region, according to research.

Within the Asia-Pacific region, Gartner expects IT spending by banking and securities firms to reach $19.1bn in 2017, an increase of 4.7% from 2016. This forecast is based on total enterprise IT spending.

Gartner said Singapore would have a growth rate of 6.6% in 2017, the highest of all the region’s mature markets including Australia, New Zealand, Singapore and South Korea. New Zealand came second at 6.5%.

Within Asean, Singapore’s spending is the highest, totalling US$1.4bn in 2016. IDC found that the Asean countries of Malaysia, Indonesia, Thailand, Singapore, the Philippines and Vietnam spent an average of US$896m in 2016.

“Singapore maintains a comparatively higher growth rate due to its position as a technological and operational hub for many pan-Asean banking franchises,” said Sui-Jon Ho, senior market analyst, IDC Financial Insights Asia-Pacific. “This means technology budgets here will be indirectly bolstered by tailwinds from proximate emerging markets like Indonesia, the Philippines, Thailand and Malaysia, which are expected to experience internal IT growths of between 6.7% and 13.4%.”

However, in terms of the country with the fastest growth rate in IT spending in the Asia-Pacific region, IDC expects Indonesia to top the ranking with an estimated 13.4% growth rate.

“The emerging markets are investing in IT at a higher rate than growth leaders of mature economies like Singapore, as they are driven by a lower baseline in absolute IT spending,” said Ho.

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“Also, most financial services institutions in mature markets have concluded their enterprise-wide transformation initiatives and are currently exploring smaller, strategic IT investments. In contrast, financial institutions in the emerging markets have only just begun, or are amid significant technology overhauls in their core systems, comprising relatively extensive projects with commensurately larger budgets.”

For the region as a whole, the software segment is expected to show the most rapid growth at 9.4% in 2017, as firms in the banking and securities industry invest more in applications, infrastructure and vertical-specific software.

Another priority is IT investments that help firms to “grow the business”, with the banking and securities industry trying to develop partnerships or new models to tackle new incumbents from fintech.

“The banking and securities industry is working to reinvent business models due to these new players and is trying to integrate digital platforms firmly into business and operating models,” said Moutusi Sau, principal research analyst at Gartner.

Overall, regional IT spending is tapering as budgets shift from big-ticket, enterprise-wide transformation projects toward more strategic spending areas that are business- or process-specific, said Ho.

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