PracticeConsultingIT investment to grow for banks

IT investment to grow for banks

According to research firm IDC, IT spending by European banking institutions, in the face of political, economic, and technological changes, will continue to grow strongly in the next few years, reaching $67bn by 2004.

“Higher expenditure and stronger growth are expected in the delivery channels and in back-office solution areas as a result of banks’ needs to enhance distribution capability and internal efficiency,” said Barbara Blesio, director of IDC’s European banking research.

According to IDC, the delivery channels segment is set to show an outstanding 1999-2004 compound annual growth rate (CAGR) of 13.9% due to investments by banks in technology such as the Internet and wireless. The fastest-growing segment, however, will be the back office, increasing at a CAGR of 16.3%.

IDC believes investments are being driven by banks’ needs to improve their cross-selling capabilities, productivity, flexibility, and time to market. They have many avenues open to them to achieve these goals, such as the improvement of CRM to help prompt targeting of the evolution of the market; improvement of efficiency through integration of new front-office applications with back-end processes; enhancement of management capabilities and upgrading of infrastructure; and mergers and acquisitions and internationalisation to achieve economies of scale.

Demand is also strong from both individual and corporate customers for asset management services and investment support. IDC forecasts that European banks will put significant efforts into the capital markets area to serve both customers and internal investment needs equally.

IT spending in the European banking sector, 1999-2004 estimates IT spending and growth by solution areas and outlines the current direction of banks’ IT budgets. It is available for purchase from your local IDC office.

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