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Management Strategies

11:26 AM
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Bank IT Spending Growth on the Decline

A new Celent report finds that IT spending is stagnant in North America and Europe, but on the rise in the Asia-Pacific region.

Global bank IT spending growth is expected to experience a slight decline in 2012, according to research released this week by Boston-based financial analyst firm Celent.

The research, detailed in a report titled "IT Spending in Banking: A Global Perspective," found that total bank IT spending across North America, Europe, and Asia-Pacific will grow to $173.3 billion in 2012. This spending level is approximately 2.8 percent higher than 2011, but less than the growth in spending in 2011, which was 3.4 percent higher than 2010.

The majority of the growth in IT spend in 2012 is coming from Asia-Pacific banks, according to the report. Spending by banks in this region will grow by 6 percent in 2012 to $59.4 billion, and this growth is expected to continue in 2013 to a total of $62.3 billion.

North American banks -- specifically U.S. banks -- are faring far worse. North American bank spending will grow by a mere 2.4 percent in 2012 to$54.7 billion, according to Celent. This figure is expected to increase in 2013 to $56.3 billion.

However, European banks are in the worst state, according to Celent figures. IT spending by European banks will grow only .3 percent in 2012 to 59.2 billion. European spending growth will continue to be flat through 2013 as spending increases to just $59.5 billion.

According to Celent, the most telling indicator of future spending and growth relates to investments in new IT projects. Of the total investment in IT in 2012, 77.6 percent goes to maintenance, rather than new investments. That figure is expected to drop, albeit slowly, to 76.9 percent in 2014.

"From an IT spending perspective, the next couple of years are going to be rocky," said Jacob Jegher, senior analyst with Celent's Banking Group and coauthor of the report, in a statement. "The good news is that a slight turnaround is in sight. When examining the sum of the three regions, IT spending is expected to grow by 3.1 percent in 2013 and 3.4 percent in 2014."

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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