Efficiency to cut costs is all that is persuading WEstern European banks to invest in IT. At least according to IDC’s latest IT spending forecast study, which indicates the banks will increase their IT-related investments by a CAGR of 7% in the 2002-2007 period. Total IT spending will reach $52 billion in 2006, from $37 billion in 2002. Banks’ business environment is becoming calmer, now that the panic regarding strong losses, risk exposure, and margin shrinkage is over, thanks to strong cost-control measures. As a result, Western European banks are focusing again on enhancing their IT infrastructure.
“Efficiency remains the first objective of bank IT investments. As a consequence of their strong cost-cutting policies, banks have realized that the only way to keep their operational costs under control is to strongly rely on IT,” says Daniele Bonfanti, program manager, European IT Opportunity, Financial Services. “However, to ensure that IT adoption is effective, a different approach to IT investments is required involving a more structured IT budget allocation process.”
IDC believes that outsourcing is an increasingly viable solution for large banks, adding more flexibility to their IT departments. Some major external drivers such as new accounting standards, risk management policies, and major requirements resulting from European integration will also impact banking IT decisions. The study, Western European IT Spending in the Banking Sector Forecast, 2002-2007 (IDC #PF03K, May 2003), focuses on the evolution of IT spending from 2003 to 2007, highlighting banks’ major IT requirements and adoption trends.
The study also focuses on the functional areas within the banking sector that are most promising in terms of IT spending growth and provides an overview of what is happening at a European level and some insights on the major European countries, namely France, Germany, Italy, Spain, and the U.K.
IT spending forecast data is presented by product and services, providing an analysis of the market evolution from different perspectives. Essential guidance on the major challenges faced by IT vendors is also provided