IT Spending at U.S. Banks: Current and Future Trends

January 11, 2002

Abstract

Boston, MA, USA January 11, 2002

I.T. Budgets at U.S. Banks continue to grow, despite Recession  

In a new report, Celent examines US banks plans for IT investments and finds that US banks will spend over US$34 billion on technology in 2002

Despite the current recessionary environment in the USA, US banks will increase their technology spending this year by over 4% compared to 2001, according to a new report from Celent Communications. This new report examines the trends and business issues driving this growth, including the decline in the number of banks and competitive pressures from non-banks.

The report shows how top banks are spending in excess of US$2 billion each annually on technology, with the largest bank reaching a staggering spending level of US$5 billion in 2002.

According to

Octavio Marenzi, managing director at Celent, "banks have continued to increase their IT budgets, even while many other industries are holding back. In part, banks have little choice in this -- a very large proportion of their spending is on maintaining existing infrastructure. However, banks are also increasingly viewing technology as a competitive differentiator, as a tool with which to wrest market share from their competition."

The report explains how consolidation in the banking industry is actually driving increased spending on IT. According to Octavio Marenzi this is because "larger banks do not only spend more on IT than smaller institutions, they spend a greater percentage overall. The largest commercial banks in the USA spend as much as 25% of their total expenses on IT, with certain specialist banks spending even higher percentages. Small banks tend to spend a far lower percentage of their total expenses on technology."

A Table of Contents is available online.

of Celent Communication's banking research services can download the report electronically by clicking on the icon to the left.

        

Send mail to info@celent.com with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA  January 11, 2002

I.T. Spending at U.S. Banks: Current and Future Trends

Return to report Abstract

EXECUTIVE SUMMARY 3
INTRODUCTION 4
CHALLENGES TO COMMERCIAL BANKING IN THE US 5
  Economic Conditions 5
  Competition 6
REGULATION AND DEREGULATION 8
  Industry Consolidation and Concentration 9
BANKING ON THE INTERNET 12
  On-Line Penetration 12
  Potential and Challenges 13
  Definition of Information Technology Spending 14
INDUSTRY-LEVEL SUMMARY OF CELENT'S I.T. SPENDING PROJECTIONS 16
  Information Technology Spending at Large U.S. Banks 17
BUSINESS-LINE TRENDS AFFECTING TECHNOLOGY INVESTMENTS 21
  Retail Banking 21
  Wholesale Banking 23
CONCLUSIONS 26

 

        

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