Retail banking IT spending on the rise amid economic turmoil
- 16 January, 2012 11:58
The Asia-Pacific retail banking IT spending market is expected to increase by $US1.2 billion in 2012 and hit $US30 billion over the next five years, growing with a compound annual growth rate (CAGR) of 5.7 per cent from the beginning of 2012 to 2016, according to research analyst firm, Ovum.
Ovum’s latest study, Retail Banking Technology Spending Model Through 2016: Business Function Segmentation, found that the Asia-Pacific spending on retail banking technology will increase by $US7.1 billion and banks in emerging economies in the region will grow at a rate of 8.3 per cent in 2012, hitting $US10.2 billion by year end.
Ovum financial services analyst and author of the forecast, Jaroslaw Knapik, said investments will be driven by the requirement for revenues but the evolving regulatory compliance will also take a significant toll.
He said many businesses are prioritising returning revenues to pre-recession levels, however, banks needed to focus on improving customer trust and increasing sales and servicing effectiveness, despite the challenge that may pose.
“This will lead to accelerated investment in channel technology, predominantly online banking or other channels such as mobile which will reach CAGR of 7 per cent and 7.1 per cent, respectively," Knapil said.
"Retail banks will invest in these areas in parallel to investments in channel integration and customer information systems.” If technologies allowing “smarter” selling and servicing remain popular as expected,and sales activities rise, banks will boost investments into operation, he said.
The study also indicated the Asia-Pacific spend on various middle-office components based on these technologies, such as risk management, anti-fraud, compliance and performance management, will experience growth of 6 per cent hitting $US1.45 billion by the end of 2012 and $US1.86 billion annually over the next five years.
Emerging economies in Asia-Pacific are predicted to attain the highest growth, about 8.9 per cent, hitting $US521 million by year end.