Bank IT Spend set to fall
(2 December 2008 – Australia) A US study has shown that IT spending by banks is set to fall and show negative growth over the next five years.
Financial Insights is predicting an overall reduction in IT spending for North American banking in 2009, and negative growth for five years afterwards.
The study comes at a time where the big banks in Australia are doing quite the opposite, with many undergoing significant technology infrastructure projects as part of system overhauls.
The company said that the lower spend by banks was due to contraction of the industry, increased embrace of outsourcing and offshoring, continued data centre consolidation, and pressure on bank profits.
Financial Insights reported that banks interviewed in October and November report halts in 2008 spending and smaller budgets for 2009.
There were also a number of ways that expenses would be reduced to fit into the smaller budgets. These include reducing IT staff, continuing virtualisation projects, delaying planned hardware purchases, and stalling projects already underway.
The largest of the banks interviewed, which account for more 70 percent of IT spend in North America, are instead looking to focus on acquiring troubled assets and integrating systems of merged institutions.
The study said that this will actually soften the decline in IT spending by injecting some new spend for 12-24 months post merger, but with a lower overall base for the merged institutions.
The study comes at a time where the big banks in Australia are doing quite the opposite, with many undergoing significant technology infrastructure projects as part of system overhauls.
The company said that the lower spend by banks was due to contraction of the industry, increased embrace of outsourcing and offshoring, continued data centre consolidation, and pressure on bank profits.
Financial Insights reported that banks interviewed in October and November report halts in 2008 spending and smaller budgets for 2009.
There were also a number of ways that expenses would be reduced to fit into the smaller budgets. These include reducing IT staff, continuing virtualisation projects, delaying planned hardware purchases, and stalling projects already underway.
The largest of the banks interviewed, which account for more 70 percent of IT spend in North America, are instead looking to focus on acquiring troubled assets and integrating systems of merged institutions.
The study said that this will actually soften the decline in IT spending by injecting some new spend for 12-24 months post merger, but with a lower overall base for the merged institutions.
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