IT spending will grow by 3.4 percent at global retail banks reaching US$118.6bn in 2013. The Ovum Business Trends report also finds that European banks are lagging behind their North American and Asia-Pacific counterparts, with just 1.8 percent growth expected, compared to 3.3 percent and 5.1 percent, respectively.
The report suggests that within Europe, the shift towards greater IT spending signals a reduction of the cost-cutting measures seen previously by the global banking industry. The increased IT spending is focused on digital channels, such as online and mobile banking, and digital marketing activities.
Among the digital channels, mobile banking is the clear IT investment priority in 2013, with a focus on location-based services.
Ovum's forecasts that mobile services, which includes mobile banking, will grow 4.0 percent in Europe in 2013, and rise at a compound annual growth rate of 6 percent between 2013 and 2017. 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 percent in 2013. In parallel, to compete in the digital world, a number of retail banks will shift their 'bricks and mortar' marketing activities online.
Elsewhere, Ovum's Business Trends report reveals that credit risk management and data privacy will become key regulatory compliance drivers of IT spending in 2013, with global investment into management information systems predicted to reach $6.4bn over the course of the year, and $2.2bn of spending in Europe alone over this year. This accounts for 5.5 percent of overall IT spending by European banks.
Jaroslaw Knapik, senior analyst, Financial Services Technology, Ovum, commented: "The optimistic signs on the economic horizon are driving the shift away from cost-cutting and towards investment strategies within the retail banking sector. Whilst 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 cognizant of the growing expectations of their customers, as well as the opportunities they present."