IT Spending in Banking: A North American Perspective

by Jacob Jegher, January 10, 2011
Industry Trends
North America

Abstract

North American IT spending is on the uptick and is expected to be 4% higher in 2011. Spending will continue to rise in 2012, reaching US$55.9 billion, an increase of 4.6%. We are not completely out of the woods, but the good news is that the turnaround has begun.

In a new report, IT Spending in Banking: A North American Perspective, Celent examines, analyzes, and contrasts the IT spending patterns of US and Canadian banks. North American bank IT spending will grow from US$51.4 billion in 2010 to US$53.4 billion in 2011. Retail banking IT spending is on the rise, spending on corporate banking will continue to be strong, spending on software and services is on the rise, and new investment spending is skyrocketing.

“In an ideal world, spending on new investments and innovation would take up the lion’s share of the pie. Although maintenance spending dominates, the good news is that the percentage of funds allocated to maintenance at US and Canadian banks is on the decline,” says Jacob Jegher, Senior Analyst with Celent's Banking Group and author of the report.

“After a very challenging couple of years, investments are steadily climbing in both retail and corporate banking. While the growth is encouraging, financial institutions are indicating increased scrutiny of projects and short return on investment timelines,” he adds. “It’s still difficult to get new projects funded because most banks have laundry lists of enhancements and strategic initiatives that they would like to take on.”

This report examines the regional breakdowns of retail versus wholesale spending, internal versus external spending, and maintenance spending versus new investments. The report also outlines several key North American banking technology trends and growth areas for 2011.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

6

Definition of IT Spending

7

Banking

9

 

Retail Banking Dominates

9

 

Internal Vs. External Spending

12

 

Byzantine Legacy Systems Pervade Banking

15

Top Tech Trends in Banking: 2011

18

Conclusion

33

Leveraging Celent’s Expertise

34

 

Support for Financial Institutions

34

 

Support for Vendors

34

Related Celent Research

35

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