IT Spending in Banking: A North American Perspective
Although there was a decline in North American IT spending growth (from 3.1% in 2008 to a mere 1.7% in 2009), it is now on the uptick. IT spending growth is expected to be 2.2% in 2010. North American bank IT spending will grow from US$50.3 billion in 2009 to US$51.4 billion in 2010. It will continue to grow over the next few years to reach US$55.2 billion in 2012.
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$50.3 billion in 2009 to US$51.4 billion in 2010. Spending on corporate banking is fueling growth, spending on software and services is on the rise, and maintenance spending makes up the lion’s share of the budget.
Although a few of the large Canadian banks have had some exposure to the US financial crisis, it will have little impact on IT spending. Spending will continue to flow because most Canadian banks have weathered the storm and are taking advantage of their strong position in the North American banking market. Some Canadian banks will use this position to seek acquisition opportunities south of the border. Canadian banks’ IT spending will grow by 4.4% in 2010 to US$7 billion.
“In an ideal world, spending on new investments and innovation would take up the lion's share of the pie. However, US banks have slashed spending on new investments, particularly those focused on retail banking,” says Jacob Jegher, senior analyst with Celent's Banking group and author of the report.
"The challenge is actually being able to come up with additional funds once compliance/regulatory spending, post-merger integration, and maintenance expenditures have been spoken for. Not to mention that the financial crisis has made it extremely difficult to get new projects funded. The exciting news is that spending growth on new investments in the US will return to the black in 2010," he adds.
This report examines the regional breakdowns of retail versus wholesale spending, internal versus external spending, and spending on maintenance versus new investments. The report also outlines several key North American banking technology trends and growth areas for 2010.