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Report: IT Spending in Retail Banking Will Reach $152.5 Billion By 2018

Back-end investment for compliance and investment in digital channels will drive strong growth in IT spending among North American banks, according to Ovum.

Retail banks will grow their IT spending to $152.2 billion by 2018 in response to rising customer expectations and investment in digital channels, a recent report by analyst firm Ovum predicted.

As consumers in the North American and Asian-Pacific regions grow more confident in the economic recovery following the economic crisis of 2008, banks will start looking to expand their business and attract new customers, according to the report. North American banks will increase their IT spending by 4.8% over the next 4 years, Ovum said, to $59.3 billion. The Asia-Pacific region will see the fastest growth of any part of the world, reaching $16.8 billion by 2018, and increase of 7.7%.

[For More on IT Spending Trends in Banking: Banks Spending More on Innovation: Report]

Much of the spending increases in North America will be dedicated to digital channel growth in pursuit of increasing profitability, according to Ovum. Spending on online banking among North American banks will increase 6.4% to $10 billion by 2018, with investment in other channels like mobile growing even faster, the report predicted.

Western Europe will see slower growth than Asia or North America as it continues to extricate itself from sovereign debt problems in several European countries, the report said. But Ovum still predicted modest growth of 2.9% for retail bank IT spending in Western Europe, with total spend in the region reaching $43.6 billion.

Increasing compliance costs will also lead to increased IT investment on back-end systems, the report said. That will be true for banks in all geographies as more Dodd-Frank provisions come into effect along with SEPA and Basel III.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
4/3/2014 | 1:58:42 PM
re: Report: IT Spending in Retail Banking Will Reach $152.5 Billion By 2018
It's hard to say Ivy, becuase in many areas the European banks are actually ahead of North American banks in front-end technology and sometimes back-end as well.
IvySchmerken
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IvySchmerken,
User Rank: Author
4/1/2014 | 1:15:07 AM
re: Report: IT Spending in Retail Banking Will Reach $152.5 Billion By 2018
Western European banks are seeing slower growth in their investments in digital channels due to their exposure to sovereign debt. Do you think this will put European banks at a disadvantage to their North American and Asian counterparts?
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
3/31/2014 | 8:04:21 PM
re: Report: IT Spending in Retail Banking Will Reach $152.5 Billion By 2018
Asian banks are generally farther ahead in digital channel development than North American banks, but that also leads to higher customer expectations and demands for newer and better capabilities.
Becca L
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Becca L,
User Rank: Author
3/31/2014 | 5:54:40 PM
re: Report: IT Spending in Retail Banking Will Reach $152.5 Billion By 2018
Interesting that the Asia-Pacific region is seeing the fastest growth. Is that due to increased demand or some much needed catching up? Either way, I hope this means more efficient mobile apps! Crossing my fingers for instant bill pay features.
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