This is destined to be a good year for bank IT spending, according to Celent analysts, who predict financial services firms globally will spend $363.8 billion on technology in 2011. Among banks specifically (as opposed to the insurance and securities industries, which the analysts also address in today's report), global IT spending is expected to reach $169.6 billion this year, a gain of 4.1% over 2010.
North American banks are expected to spend $53.4 billion on IT in 2011, 4% more than last year. And in the U.S. specifically, banks are due to spend around $46 billion on IT this year.
The bad news is, the bulk of this spending will be on maintaining IT infrastructure, rather than new IT projects and innovation: U.S. banks will spend $35.5 billion on IT maintenance in 2011, the analysts say. "The maintenance versus new investments conundrum is still plaguing North American banks," the Celent report notes. "Byzantine legacy systems pervade banking and are a critical component of operations." However, banks are working to reduce this burden by building SOA-based middle layers intended to lower maintenance costs, reduce application redundancy, assure data integrity and facilitate data sharing, the report suggests.
Internal IT will consume 36.7% of U.S. banks' IT budgets this year -- $16.9 billion. U.S. banks will spend $6.9 billion on hardware, $8.6 billion on external software, $2.3 billion on external services.
Retail banking will win most of the IT dollars this year in the U.S., according to Celent: $28.8 billion of U.S. banks' IT budgets will be devoted to retail banking, analysts estimate.
Next is corporate banking -- U.S. banks will spend $12.4 billion on corporate banking in 2011, according to the analysts. Much of this spending will be on upgrading aging cash management platforms to woo additional business, the analysts say.
Other areas such as investment management will also see refreshes -- Celent predicts U.S. banks will spend $5.9 billion on other banking technology initiatives such as investment management platforms designed to nurture and grow banking relationships.