Blog

IT spending projected to rise to meet consumer expectations

May 16, 2014 by Dan Kramer — Senior Vice President, Marketing & Merchant Servic, SHAZAM

Retail financial institution IT spending is predicted to hit $152 billion worldwide by 2018. Specifically, retail FIs are looking to boost their online and mobile operations in many areas of the world.

A new report, "Retail Banking IT Priorities for 2014 and Spending Forecasts to 2018," points out that the global economic recovery is prompting business expansion efforts, resulting in more money channeled into IT.

Ovum predicts the most significant growth will occur in the emerging markets of the Asia-Pacific region, where retail FIs are expected to pump an annual $16.8 billion into IT by the end of 2018. Ovum forecasts a spending increase of 8 percent in 2014 in that region.

North American FIs are expected to increase their IT spending by nearly 5 percent in 2014, with the total amount climbing to $59.3 billion in 2018. Western Europe will also amp up IT spending, with retail FIs in this region predicted to invest $43.6 billion in IT in 2018, while the 2014 growth rate is projected to be 3 percent.

Business development is considered a top priority for retail FIs going forward, with the hope to heighten revenue and profits. Ovum estimates that IT spending with that goal in mind will reach $14 billion by the end of 2018.

Online banking initiatives are forecast to grow by 6 percent in 2014 and reach $10 billion in 2018. Investment in the mobile channel is calculated to rise even more quickly, due mostly to evolving digital functionality and consumers growing expectation to bank within digital channels.

Rising compliance costs will also necessitate an upsurge in IT spending on back-end systems. This will be the case for FIs across all regions as more Dodd-Frank provisions come into effect, along with the Single Europe Payments Area and Basel III.

As global IT spending looks to be on the rise in the coming years, consider your FI’s plans for IT investment and whether your priorities line up with those of other FIs around the world.

About Dan Kramer

---

None

Connect with Dan: