Global spending on retail banking technology is set to increase by $3.6bn (3.2%) in 2012, and will hit $135bn over the next five years, reports financial services analyst Ovum.
The biggest spending will be on online banking, which is set to become the fastest growing area globally in 2012, rising 5.3%, to hit $8.3bn by year end. Elsewhere, mobile will see an increase of 5% globally in 2012, reaching $3.3bn, while management information systems and multi-channel integration/customer information systems will also see high growth rates.
“Technologies that allow ‘smarter’ selling and servicing, such as customer analytics and customer data management, are expected to remain hot areas in the near future,” says Ovum’s Jaroslaw Knapik, author of the research.
“As sales activities are expected to be on the rise again, banks will also boost investments into operations as the ability to sell products faster and service customers better will continue to be a competitive differentiator in the retail market,” he adds.
Research reveals that banks in emerging economies of the Asia-Pacific region will grow the fastest, at a rate of 8.3% in 2012, hitting $10.2bn by the end of the year. Meanwhile, Western Europe will have the lowest growth (1.9%), reaching $44bn by the end of 2012, despite being the second biggest market in terms of overall spend.
Knapik says that investing in technology will be mainly driven by the need to grow revenues as well as the changing regulatory compliance. “Returning revenues to pre-recession levels will be a priority for a number of institutions, as too will be the focus on improving customer trust and increasing sales and servicing effectiveness.”
The report further explores global spending in areas such as risk management, anti-fraud, compliance, and performance management, which are all projected to experience growth over the coming year. “Regulatory demands are forcing banks to invest in their core systems.
While in many cases tight compliance timescales lead to the ‘quick-win’ type of enhancement strategies, the ongoing nature of regulatory demands, together with the need to revamp the wider bank to allow the adoption of newer business models, is now driving significant interest in core system transformation,” concludes Knapik.
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