2014 IT budgets: Top ways banks will spend their money
According to IDC analysts, bank technology spending will increase by 4.2% in 2014, with global spending expected to eclipse $430 billion. These purchases can include investments in cyber security, regulatory compliance, storage solutions and mobile systems, among others. Often times, this increase in spending can be offset through process improvement, better governance and consolidation.
American Banker recently published an article that listed the top eight ways banks will spend their 2014 IT budgets. Below are three highlights from the list.
1. Compliance and risk management. David O’Connell, senior analyst at Aite Group, notes that banks investing in stress testing software are “embracing it as an analytical opportunity rather than just a compliance mandate.” Some institutions also use stress testing software as a loan portfolio management tool. Even so, O’Connell is concerned that there isn’t enough investment in areas such as credit decisioning, credit risk, regulatory compliance and liquidity risk and capital adequacy. He says that many banks may not realize the “true nature of their risk in many areas” and that they seem to be “satisfied and making limited increases in IT spending.”
2. Marketing analytics, with support from customer data management systems. O’Connell also notes that banks “have piles of data, some of it in core banking, loan origination and risk management systems. The easy part is analyzing it, the tough part is pulling it together, consolidating it and giving it context so it can be analyzed.” As a result, many institutions will be investing in “data integration capabilities, data quality management, and service oriented architecture.”
3. Process efficiency. Many banks have already “accelerated their adoption of document management, workflow and business process management software to turn time-consuming, paper-bound processes into simpler, web-based tasks.” Pierre-yves Glever, SVP and global practice head at Capgemini, notes, “Banks in the U.S. have been working on small processes like customer onboarding and exception management.” This trend is expected to continue to increase in 2014.
Other top areas of IT spending for 2014 include core system technology, security, private clouds and digital banking and mobile payments. For more on these hot spots, read the article from American Banker.
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