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Banks expected to invest in new technologies

By Max Burkhalter
January 19, 2011
According to a recent Ovum report, the retail banking industry is set to make significant investments in new technologies. In the next five years, Ovum anticipates 24 percent growth in technology spending in the retail banking industry, with overall investments reaching $132 billion.

Technology investments in retail banking are expected to create revenue growth in almost all international regions, but the report found Europe will experience the slowest growth even though it ranks second in actual spending.

Overall technology spending in Europe is expected to reach $43 billion within the five-year period, however, that represents just 19 percent growth. Jaroslaw Knapik, senior analyst at Ovum, said Europe's slow growth can be attributed to its shrinking technology spending in the public sector having a retroactive impact on the retail banking industry.

The largest areas for growth, according to the study, are emerging markets. Technology spending within retail banking in Asia Pacific is expected to grow 49 percent, reaching $12.7 billion. While the Middle East and Africa are not growing quite as quickly, their 36 percent growth rate is still quite impressive, even though Ovum found overall spending will reach just $5.5 billion. The study pointed to the expansion of technological systems in new banking branches as the primary reason for new spending in the emerging markets.

Globally, institutions are focusing their spending on making improvements to technological systems supporting online banking. Overall, 33 percent of all new spending is expected to go toward internet and networking-related technologies. As a result, approximately $9.7 billion will be spent on technologies supporting online banking initiatives, the report said.

"There is a strong focus on online platforms and their extension onto mobile devices and tablets, given their ability to service clients at a lower cost. In addition, technologies that allow ‘smarter’ selling and servicing, such as customer analytics and channel integration are expected to remain hot spot areas in the near future," Knapic said.

In a recent Network World report, Compuware said businesses are likely to increase spending on networks and systems management for the duration of 2011. Imad Mouline, CTO of the company’s APM Solutions department, said increased application complexity is leading to the evolution of internet browsers. HTML 5, AJAX, Flash and Flex are all expected to expand in response to advanced applications, and Mouline expects the browser will quickly become an integration platform instead of merely acting as a rendering engine.


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