Institutions With Capital May Find Vendors in the Mood to Deal

Not every firm has been affected by the financial crisis in the same way, and those with the ability, will discover an attractive market for technology spending.

North American bank IT spending will decline 4 percent in 2009 compared to 2008. We've already seen the slowdown starting, with projects focused on lending originations, application development, enterprise architecture and core banking renewal either being delayed or stalled completely.

But not all institutions are impacted by the crisis in the same way. Those that remain well-capitalized will find that vendors are more willing than ever to strike attractive deals. For those institutions, the best advice is to move full steam ahead. If the need is real and solutions are available, this will be the best time to move ahead with a strategic investment. Competitors will be inwardly focused and vendors very willing.

There will be subsequent changes to IT spending patterns. IT services will be a strong technology category as institutions need to conserve capital and will increase adoption of IT outsourcing and BPO. All capital investments should be scrutinized, and the definition of noncore processes should be expanded. Banks that can off-load capital-intensive operations and focus on differentiators can fix their balance sheets and remain focused on making the most important processes better. Two areas that are ripe for outsourcing are payments and loan processing.

We know that the industry will be smaller and more conservative in 2009. It also will be more regulated and more inwardly focused than ever. Those institutions that are able to focus on long-term benefits and innovation will be better positioned to steal business from competitors as banking and the economy emerge from this bleak time.

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