Banks shifting from cutbacks to investing in digital services
Investment in IT at retail banks across the world is expected to grow by 3.4 per cent in 2013, as banks turn away from cost cutting, a new report has claimed.
According to the Business Trends report from analysts at research firm Ovum, banks will invest up to $118.6 billion in IT as the priority shifts from cutting back on costs to customer satisfaction and supporting revenue growth.
However, banks in North America and Asia Pacific will lead the way, with European institutions falling behind, the report found. Growth of 3.3 per cent and 5.1 per cent respectively will be seen in those regions, Ovum said, with Europe registering only 1.8 per cent growth.
But of that investment, European banks will increasingly focus on digital channels, analysts said, with online and mobile banking coming to the fore as financial institutions try to increase customer satisfaction and capitalise on opportunities for revenue growth.
The report found that mobile banking was considered a priority investment for the year, with banks keen to take advantage of features such as location-based services.
Investment in online channels, which includes online banking services and services offered through mobile web browsers, is set to grow by 4.2 per cent this year.
Another area of interest for banks is credit-risk management and data privacy, which will be driven by regulatory compliance. Global investment in management information systems is expected to reach $46.4 billion in 2013, with $2.2 billion of that in Europe.
"The optimistic signs on the economic horizon are driving the shift away from cost cutting and towards investment strategies within the retail banking sector," said Jaroslaw Knapik, Ovum's senior analyst in financial services technology, "Whilst regulatory compliance has certainly fuelled a significant amount of the investment predicted in our forecasts, it is by no means the sole driver. The level of investment in digital channels gives a clear indication that banks are fully cognisant of the growing expectations of their customers, as well as the opportunities they present."
Irish banks are getting on board with digital channels. Earlier this week, Bank of Ireland announced it was giving customers new online features . The Pay to Mobile service will allow customers to send money to friends and family with a registered Bank of Ireland account by using their mobile number.
The bank said the service was the result of investment in online channels. Its mobile banking app has more than 180,000 active users. "The changing needs and preferences of our customers, coupled with technological advances, has led to the rapid adoption of direct banking channels," said Gavin Kelly, head of direct channels at Bank of Ireland.
"We want to enable our customers to access banking services through the technologies that they use everyday."