Although North American banks plan to keep technology spending flat this year, a recent polling of CIOs by Forrester Research Inc.'s Giga Information Group, headquartered in Cambridge, Mass., has noted that IT budgets will focus on improving regulatory compliance and risk management.
Increases in spending on risk management and compliance software tops the list for North American bank CIOs who are looking to improve regulatory compliance as well as strengthen employee efficiency and risk management.
According to the study, North American banking CIOs said that general cost cutting and regulatory compliance were equally the most important business issues for banks.
One of the top issues CIOs are facing is complying to the USA PATRIOT Act and dealing with ways to prevent identity theft, according to Giga industry analyst Penny Gillespie.
"As far as the banks go, their big issue to grapple with now is customer identification for the USA PATRIOT Act," Gillespie says. Although identity theft is an increasing problem, Gillespie says some banks are working to prevent it from happening.
"As we move more to an online world where you don't have that personal touch and validation or verification with a customer, sometimes that makes it more challenging," says Gillespie.
Another compliance-related issue CIOs are facing is money laundering. Some software that banks are using to prevent identity theft and reduce risk are Mantas (Fairfax, Va.) and SearchSpace (London), says Gillespie. These vendors' solutions are designed to detect suspicious behavior and relationships between businesses.
Concerning the future of spending for CIOs, Gillespie says compliance, specifically regarding customer identification, will only become more difficult for banks that do not seem to be strict enough.
"Compliance, particularly if it pertains to customer identification, is only going to get tougher because, even with some of the research I've seen, if the banks do not address it they are going to be looking at more regulation and legislation," she says.