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Growth Expected, Growth Delivered

F.Y. Teng | Oct. 10, 2012
A quick view of the ICT spending picture across key sectors and an invitation to compare against the MIS 100 index.

Banking on US$173.3B
According to at least two research houses the world's banks should be spending more on ICT this year. Advisory firm focusing on technology in the global financial services industry Celent put out a report early this year (IT Spending in Banking: A Global Perspective) saying that "total bank IT spending across North America, Europe, and Asia-Pacific [will] grow to US$173.3 billion in 2012." And that "this spending level is approximately 2.8 percent higher than 2011." It did however go on to state that it found the figure a "discouraging but not surprising indicator that IT spending growth is slightly on the decline."

Celent's analysis leading up to the report involved a comparison of IT spending trends in the three major regions. "The majority of the growth is coming from Asia-Pacific banks: spending by banks in this region will grow by 6.0 percent in 2012 to US$59.4 billion. This growth will continue in 2013 to reach US$62.3 billion. North American banks, specifically US banks, are reporting more dismal results. North American banks' spending will grow by a mere 2.4 percent in 2012 to US$54.7 billion. This figure will increase gradually to 2.9 percent in 2013 to US$56.3 billion. European banks are in far deeper trouble and are reporting little to no growth. Spending by European banks will grow 0.3 percent in 2012 to US$59.2 billion. European spending growth will continue to be flat through 2013, increasing by just 0.4 percent to US$59.5 billion."

Custom research firm IDC in August put out its Worldwide IT Spending 2010-2015: Worldwide Banking IT Spending Guide 1H12 Update report, which more or less concurred with Celenta's and said, with a different set of numbers, that IT spending in the banking industry will keep going up. According to figures published in the report, "worldwide bank IT spending" is expected to increase at the compound annual growth rate (CAGR) of 5.2 percent through 2015.

The report also points out the differences between the banking industries of Asia/Pacific, Europe, North America the Middle East and Latin America. "The CAGR [of banking IT in Europe] for the forecast period [of 2010 through 2015] now stands at 3.6 percent, compared with 4 percent in the previous forecast," according to the report, which attributes the slight dip to "growing concerns about the future of the eurozone."

Jeanne Capachin, Vice-President at IDC Financial Insights, which put out the report, said in a statement at the time of its release that "the global economy will continue to flounder in 2012 as the crisis in Western Europe casts a long shadow" and that "as a result, many banks are taking a closer look at their expense budgets as they consider new IT investments." Re Asia/Pacific, the IDC report pegs its spending increase at the CAGR of 7.9 percent. For North America, the report forecasted "a full percentage point higher than in the previous forecast. The CAGR for the forecast period is now at 3.7 percent, as US banks emerge from the financial crisis and Canadian banks continue their strategic investments." And as for the Middle East and Latin America, IDC reports a 10 percent increase in IT spending through the year.


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