Retail Bank IT Spending to Increase by $3.6 Billion Globally in 2012: Report

IT spending by retail banks globally will increase by $3.6 billion in 2012, according to U.K. analyst firm Ovum.

According to the firm's report, titled "Retail Banking Technology Spending Model Through 2016: Business Function Segmentation," retail banks will spend $135 billion over the next five years on technology.

Banks in emerging economies in the Asia-Pacific region will grow the fastest, at a rate of 8.3 percent, in 2012, according to Ovum. Western Europe is predicted to have the lowest growth of all regions -- 1.9 percent -- despite being the second biggest market in terms of overall IT spend, at $44 billion. The technology investments will be mainly driven by the need to grow revenues and improve customer trust, said Ovum, but will also be driven by changing regulatory compliance. Spending related to online banking technology is expected to be the fastest growing area globally in 2012, rising 5.3 percent to hit $8.3 billion by year end.

The report predicts that retail banks will increase spending related to channel integration and customer information systems by 4.2 percent in 2012, hitting a total of $5.6 billion. Ovum also predicts that banks will boost investments into operations, such as account origination and administration, by 4 percent.

Retail banks will also increase spending on technology to help reduce costs related to increased regulation, notably Dodd-Frank and Basel III, said Ovum. The analysts said technologies related to risk management, anti-fraud, compliance, and performance management will experience growth of 4.6 percent this year, for a total of $6.1 billion globally.

Core banking technology spending is expected to increase by 2.5 percent globally, reaching $19 billion this year and $22.5 billion over the five-year timeframe.

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