It consultants Celent estimate that North American bank spending on information technology will climb to US$44.3 billion in 2005 as banks push toward increasing their investments in new technologies.
In a new report, “A North American Perspective: IT Spending at US and Canadian Banks,” Celent provides a detailed look into the IT spending trends of both US and Canadian banks. Our findings indicate that IT spending in the North American banking industry will continue to rise at a moderate rate. Technology spending by US and Canadian banks is expected to reach US$44.3 billion in 2005, a 3.9 percent increase over 2004.
US banks will be responsible for the greater part of North American IT spending. Investments in technology are forecast to reach US$38.5 billion in 2005, representing 4 percent growth over 2004. IT spending by Canadian banks in 2005 is expected to reach US$5.8 billion-a 3.2 percent increase over 2004.
Areas such as security, payments, multi-channel integration, and branch automation will be highlighted in 2005 as banks push toward increasing strategic investments in new technologies. This year, US and Canadian banks will spend US$8.2 billion on new technology, a 14.3 percent increase over 2004. Spending on maintenance will grow to US$36.1 billion in 2005, a 1.8 percent increase over the previous year. Maintenance spending will remain relatively constant over the upcoming years as banks funnel funds away from this segment and boost investments in new technology. Banks that successfully work toward and achieve the shift from maintenance to new technology investments will come out winners.
“Harnessing technology to realize business goals is one of the most fundamental critical success factors for a bank today,” says Jacob Jegher, senior analyst in Celent’s banking group and author of the report. “As the forces of business and technology fuse, bank leaders will craft their competitive direction to innovate and meet market demand.”