Technology spending by banking sector under heavy scrutiny

Peter Dinham
Thursday, 12 March 2009 06:06

IT Industry - Deals

“Immediate cost pressures will constrain in the short-term, but this will need transformation and IT investment and many areas of IT spending will therefore remain resilient.”

Mayo predicts that IT spend in bank branches will be maintained as banks look to technology to maintain service levels after headcount reduction, with banking operations like account administration and loans processing, growing in IT investment focus to support greater efficiency and drive lower cost base.
 
“Similarly, technology spend to support risk management and compliance will be maintained, however, banks will be looking to re-use existing systems as far as possible, so immediate technology vendor opportunities will be more subdued than many expect.”

Mayo again emphasises that the downward impact of the financial crisis on banking technology spend will be significant, with a major structural shift in banking and banks needing to adjust their operating cost bases accordingly.
 
However, opportunities for technology vendors to support this required transformation has increased, according to Mayo, and he says banks are more open than ever to alternative sourcing approaches, with internal IT departments likely bear a significant brunt of IT spend reduction pain.
 
While 2009 and 2010 are likely to be tough years for vendors, Mayo says that medium and long-term opportunities remain significant for those who can adapt.