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Bank IT spending to reach $100bn in 2018

Bank IT spending within the financial services sector is set
to hit the $100 billion mark by 2018, according to the latest study conducted
by Ovum.

According to research, there is a consensus across capital
markets, corporate banking and asset management that technology spending will
increase in the coming years, with much of the growth in investment down to IT
driving cost-savings elsewhere within the finance industry.

Bank IT spending within the financial services sector is set
to hit the $100 billion mark by 2018, according to the latest study conducted
by Ovum.

According to research, there is a consensus across capital
markets, corporate banking and asset management that technology spending will
increase in the coming years, with much of the growth in investment down to IT
driving cost-savings elsewhere within the finance industry.

The firm also revealed that 2014 is set to be a difficult
year for capital markets, following on from a tough 2013. However, despite the
concerns during 2013, IT spend increased by 3.7 per cent, with analysts
predicting a 4.8 per cent growth in 2014.

Daniel Mayo, practice leader, financial services technology,
Ovum, said that banks are currently looking to renew their platforms and, as a
result, are investing in technology and IT for the future of their business.

He said, “This investment will be mostly focused on the
front office in order to improve order management systems, but we will also see
a continuation of significant investment in the back office to improve
automation and scalability levels.”

Financial institutions are increasingly looking to move
towards a central banking function, which requires the consolidation and
improvement of systems in a bid to make them much more efficient. On the back
of this, Ovum believes IT spending in this area will record an annual compound
growth rate (CAGR) of 6.4 per cent between 2014 and 2018.

IT and technology spending within the asset management
sector is also set to rise in the next four years. The industry has recovered
from the economic crisis and has now reached its pre-recession levels, meaning
firms are willing to begin making significant investments in tech and IT.

Mayo said, “With a current trend of account holders desiring
visibility and control, particularly in the digital channels, client servicing
systems are having more money placed into them. On another note, with the
continuing focus on cost control in asset management, much of the investment
marked to improve IT infrastructure has been put on hold.”

Corporate banking IT spending is another area of finance
that is heading towards a year of outright growth in 2014, with IT spending
growth set to increase to five per cent, from just over three per cent in 2013.
Much of the investment will be targeted towards providing liquidity management.

By CIO staff

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