Finextra Research, a financial technology news service, announced today that its Financial Technology Strategies 2003 report and survey had uncovered worrying signs of cutbacks in IT spending in the banking industry.
According to the survey, which covered over 70 banks, cost reduction is the main factor driving business and technology strategies today. Only projects that promise to make existing processes more efficient, widen margins or improve customer service gets taken seriously. Which means, says the survey, that despite IT budgets falling across the sector, IT spending in the back office will actually see moderate growth relative to the rest of the organisation.
Finextra adds that IT staff numbers in banks will decrease in 2003 as the consequence of fewer internal projects, improved processes and internal efficiencies, and a move towards more tactical IT outsourcing.
Paul Penrose, Head of Research, Finextra, says: “Given the depressed economic conditions, it is no surprise to find financial institutions exercising caution in their IT spending. But while the figures all point to a continuing downward trend in spending and staffing levels throughout 2003, there are some shafts of light penetrating the gloom. This comes through in an appreciation of the way in which technology is being applied to mitigate the worst effects of the market downturn and contribute to lowering costs.”
The report is based on a survey of over 70 senior IT decision-makers and strategists from financial institutions, including investment banks, fund management organisations, custodians, central banks and exchanges.
The report was distributed to some delegates to Finexpo 2003 – the City Technology Strategies conference in London, which opened on 29 January.