IT Spending in Banking: A North American Perspective

by Jacob Jegher, January 19, 2012
Industry Trends
North America

Abstract

North American IT spending growth is growing, albeit slowly, and is expected to be 2.4% higher in 2012. Growth will climb slowly in 2013 as IT spending by North American banks reaches US$56.3 billion, an increase of 2.9%. There is still plenty of uncertainty in the United States, and the next couple of years are going to be rocky.

In a new report, IT Spending in Banking: A North American Perspective, Celent examines, analyzes, and contrasts the IT spending patterns of US and Canadian banks. North American bank IT spending will grow from US$53.4 billion in 2011 to US$54.7 billion in 2012. Canadian banks are leading the charge. Spending on corporate banking will continue to be strong, and compliance, regulatory, and security spending are all rising dramatically. With that said, it’s not all fine and dandy; retail banking IT spending in the US is being stifled, new investment spending is limited, and maintenance spending is still tying up IT budgets.

“Although banks have invested in system modernization and are attempting to become more efficient, they are unable to escape the maintenance conundrum,” says Jacob Jegher, Senior Analyst with Celent's Banking Group and author of the report.

“The good news is that the percentage of funds allocated to maintenance is slowly declining,” he adds. “There is, however, a stark paradox in the market—the trend toward enhancing and revamping self-service channels requires significant investment, and access to these funds is severely limited.”

This report examines the regional breakdowns of retail versus wholesale spending, internal versus external spending, and maintenance spending versus new investments. The report also outlines several key North American banking technology trends and growth areas for 2012.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Erica Ferguson
eferguson@celent.com
Tel.: +1 617 262 8225

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

Executive Summary

3

Introduction

6

Definition of IT Banking

7

Banking

9

 

Retail Banking Dominates

9

 

Internal Vs. External Spending

12

 

Byzantine Legacy Systems Pervade Banking

15

Top Tech Trends in Banking: 2012 and Beyond

20

 

Mobile RDC Takes Center Stage

20

 

Mobile Banking Moves to Mainstream in the US

21

 

Mobile Banking Moves to Mobile Marketing

22

 

The Online Channel Goes Mainstream But Needs to Get with the Times

23

 

Digital Channels Are Forcing a Branch Evolution

24

 

The Tablet Will Act as a Catalyst to the Redesign of Online Banking

25

 

Life After Durbin: Resettling the US Debit to a “New Normal”

26

 

New Business Models Permeate BPO

27

 

Moving from Data to Enterprise Intelligence

28

 

Analytics on Workforce Staffing Poised for Growth

29

Conclusion

31

Leveraging Celent’s Expertise

32

 

Support for Financial Institutions

32

 

Support for Vendors

32

Related Celent Research

33

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