IT Spending Trends in European Banking, 2005

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20 July 2005
Axel Pierron

Abstract

Paris, France July 20, 2005

Celent expects IT spending at European banks to exceed over 45.7 billion in 2005.

In a new report, " ," Celent provides detailed information on the types of IT investments being made this year by European banks. The report includes analysis of the IT priorities at European banks, including how budgets are being allocated and the business trends driving those decisions.

This year HSBC leads European banks in total IT spending, with an estimated budget of over 3 billion. UBS takes second place with 2.8 billion allocated to IT, followed by Deutsche Bank with 2.6 billion. ABN AMRO takes fourth with an estimated 2.28 billion. Only these four are members of the elite club of European banks spending more than 2 billion on IT in 2005.

In 2005, European banks will increase IT spending 2.5% from last year. In conjunction with this growth, technology investments now make up a smaller share of European banks operating expenses. IT costs as a percentage of total operating expenses fell 3%. "In fact, the modest augmentation in 2005 was primarily driven by increased maintenance costs due to the enormous volume of business generated in 2004. Clearly, the turbo-charged IT spending days of 2002-2003, as European banks look to rein in operating costs allocated to IT", says Axel Pierron, Celent Analyst and author of the report. "Cost reduction is still the main goal" adds Pierron.

Three benefits stand out among those driving IT spending: cost reduction (90%), replacing legacy systems (75%), and improving customer service (65%). Compliance with new regulations will be among the years main priority. According to Celent 39% of European banks place compliance at the top of their agenda due to the approaching implementation of regulation such as Basel II and MiFID.

The 28-page report contains 14 figures.

of Celent's Retail Banking and Wholesale Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.

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