Technology spending by North American banks will remain flat for 2003, based on a recent survey of CIOs by Giga Information Group, a wholly owned subsidiary of Forrester Research, Inc. (Nasdaq: FORR). Allocation of IT budget dollars for planned initiatives will concentrate on improving regulatory compliance, risk management, and increased spending.
The new report reveals a list of detailed technology areas on which CIOs will focus. Spending for outsourced services and software will see the largest increase, while spending for consulting will decline and hardware and network equipment spending will remain flat. Salaries and benefits are down in the US, largely owing to reductions in work force. Top areas of new product spending are enterprise integration projects, followed by security and enterprise portals. Spending on knowledge management and CRM is a close third.
“We expect North American banks — particularly those in the US — to be subject to more economic strains and competitive pressures in 2004 and beyond,” said Penny Gillespie, analyst at Forrester. The industry continues to be bombarded with new compliance obligations in the US — the Gramm-Leach-Bliley Act of 1999, the USA Patriot Act, and the Sarbanes-Oxley Act — with the potential for Basel II compliance, at least for large-money banks. Gillespie added, “Banks that are more aggressive in adopting risk management and compliance software while attempting to become more efficient with straight-through processing, technology-advanced infrastructure, and core processing solutions will be better positioned for the upcoming challenges.”
Bank CIOs should increase their IT investments in 2003 and 2004 where this spending can help improve productivity and efficiency for employees, enforce compliance, and mitigate risk. Banks seeking to use new technologies for competitive advantage should invest in portals, Web services, Linux, and J2EE on the mainframe. Banks looking to reduce risk should invest in artificial intelligence; to improve productivity for employees, they should invest in employee-facing portals and advanced human resource applications for human capital management.
Highlights In The Report Entitled “Reducing Costs and Regulatory Compliance Top Priority List For North American CIOs” are:
- Key business issues for North American banks.
- Key issues for North American bank CIOs.
- Bank IT budgets and spending.
- Bank IT management practices.
- Bank-specific technologies.
The research mentioned in this press release is available to Giga Advisory clients and can be found through www.gigaweb.com