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Retail banking IT spend to hit $118.6bn

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 05 Feb 2013

Retail banks across the globe will see IT spending grow 3.4% this year, to hit $118.6 billion, as CIOs focus on customer satisfaction and revenue growth, says global analysis firm Ovum.

The research company finds that European banks are lagging behind their North American and Asia-Pacific counterparts, with just 1.8% growth expected, compared to 3.3% and 5.1%, respectively.

In a new Business Trends report, Ovum suggests that within Europe, the optimistic shift towards greater IT spending signals a reduction of the cost-cutting measures seen previously by the global banking industry.

"The optimistic signs on the economic horizon are driving the shift away from cost-cutting and towards investment strategies within the retail banking sector," says Jaroslaw Knapik, senior analyst of financial services technology at Ovum.

Ovum says a focus on digital channels, such as online and mobile banking, and digital marketing activities, will enable banks to improve customer satisfaction and revenue growth strategies, and fuel cross-selling and upselling opportunities in the short- and mid-term.

"While regulatory compliance has certainly fuelled a significant amount of the investment predicted in our forecasts, it is by no means the sole driver. The level of investment in digital channels gives a clear indication that banks are fully cognisant of the growing expectations of their customers, as well as the opportunities they present," says Knapik.

Among the digital channels, mobile banking is the IT investment priority in 2013, as retail banks attempt to capitalise on the features unique to mobile, such as location-based services.

Ovum's forecasts show the other channels, which includes spending on mobile phone services where content is delivered via SMS, interactive mobile phone banking, will grow 4% in Europe in 2013, and rise at a compound annual growth rate of 6% between 2013 and 2017. The category also includes other channels such as TV banking, independent financial advisors, or other third-party providers.

Overall, spending on online channels in this region (including traditional online banking services and mobile-browser-based banking services) is set to grow 4.2% in 2013, says Ovum. In parallel, to compete in the digital world, a number of retail banks will shift their 'bricks and mortar' marketing activities online.

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