ICT market research firm BMI-TechKnowledge reports that the local banking industry represented an IT opportunity of R6.1 billion in 2003 and is expected to grow on a compound annual growth rate (CAGR) of 10.1% to reach R9.9 billion by 2008.
This is according to BMI-T`s South African Banking Technology Report 2004. Report author and senior BMI-T analyst Philip van Heerden says the South African banking industry is highly developed, complex, diverse, extremely competitive and prone to external influences.
"The IT perspective of banking is equally demanding with high system complexity as the status quo. Globally and within SA, banks have in recent years continually cut IT budgets, however, BMI-T believes the trend is slowly reversing with some of the major banking groups already indicating a double-digit increase in IT spending," he says.
Due to the budget cuts of the last two to three years, BMI-T has adjusted the size and growth of the industry downwards from previous estimates. Banking IT spend growth is expected to slow down in 2005, thereafter BMI-T expects the industry to increase IT spending as the consolidation phase and the regulatory "perfect storm" subsides.
The complexity of IT in the banking sector has led to a number of trends to emerge in this arena: customer relationship management-related spending, especially in contact centres, is expected to increase the share of wallet and to support so-called "bancassurance" efforts.
BMI-T`s report says IT services achieved a CAGR of 11.8% over the forecast period, followed by software at an 11.3% CAGR. Hardware is the weakest performing area, decreasing in actual proportion on a low comparable CAGR of 6.6%.
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