Global IT spending associated with governance, operational risk, and compliance (GORC) activities is expected to increase at a CAGR of 6.6% overall, from $1.4 billion in 2008 to $1.7 billion in 2011, according to a new report from Boston-based analyst house Celent.
Celent expects IT spending in operational risk management will come mainly from the US, Europe, and Japan. Financial institutions in emerging economies, particularly the Asia-Pacific, will also see a rise in their IT spending for GORC.
Internal spending will continue to consume the lion's share of budget, accounting for an average 60% of total spending across globe. The growth rates for the next round of investments in GORC will peak during late 2010 and early 2011, states Celent. Both North America and Europe will see similar levels of IT spending in 2010, and this will continue in 2011, the analyst house predicts.
The uplift in spending will benefit those third party suppliers who can provide an "out of the box" approach to banks looking to replace or consolidate in-house tools.
However, the forces of consolidation on both sides are not relenting, notes Celent, and the supplier market will likely shrink further.
"There is now a 'get big or get out' theme at play, as significant investments are required in an end-user market which is increasingly sophisticated in its demands," states the report.