A North American Perspective: IT Spending at US and Canadian Banks

by Jacob Jegher, February 3, 2005

Abstract

Montreal, Canada February 3, 2005

Celent estimates that North American bank spending on information technology will climb to US$44.3 billion in 2005 as banks push toward increasing their investments in new technologies.

IT budgets are a crucial and determining factor in the pursuit of both new and existing technology projects. Technology investments are not simply about maintaining existing equipment葉he strategic IT investments of today are the competitive differentiators of tomorrow. Targeted technology investments with measurable ROI can enable financial institutions to realize effective strategies.

In a new report, , Celent provides a detailed look into the IT spending trends of both US and Canadian banks. Our findings indicate that IT spending in the North American banking industry will continue to rise at a moderate rate. Technology spending by US and Canadian banks is expected to reach US$44.3 billion in 2005, a 3.9 percent increase over 2004.

US banks will be responsible for the greater part of North American IT spending. Investments in technology are forecast to reach US$38.5 billion in 2005, representing 4 percent growth over 2004. IT spending by Canadian banks in 2005 is expected to reach US$5.8 billion預 3.2 percent increase over 2004.

Areas such as security, payments, multi-channel integration, and branch automation will be highlighted in 2005 as banks push toward increasing strategic investments in new technologies. This year, US and Canadian banks will spend US$8.2 billion on new technology, a 14.3 percent increase over 2004. Spending on maintenance will grow to US$36.1 billion in 2005, a 1.8 percent increase over the previous year. Maintenance spending will remain relatively constant over the upcoming years as banks funnel funds away from this segment and boost investments in new technology. Banks that successfully work toward and achieve the shift from maintenance to new technology investments will come out winners.

"Harnessing technology to realize business goals is one of the most fundamental critical success factors for a bank today," says Jacob Jegher, senior analyst in Celent's banking group and author of the report. "As the forces of business and technology fuse, bank leaders will craft their competitive direction to innovate and meet market demand."

This 38-pagereport contains 26 figures. A table of contents is available online.

of Celent Communications' Retail Banking and Wholesale Banking research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

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 operating unit 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

 

Montreal, Canada February 3, 2005

IT Spending at US and  Canadian Banks

Return to report Abstract

 

EXECUTIVE SUMMARY 3
INTRODUCTION 5
IT SPENDING: OVERVIEW 6
  Overall IT Spending Growth 6
  Budgets Allocation: Retail Dominates 7
  Budget Allocation: Internal Versus External Spending 12
THE TUG-OF-WAR: MAINTENANCE VERSUS NEW INVESTMENTS 17
TRENDS AND GROWTH AREAS FOR 2005 24
THE ROLE OF THE CIO 28
  Technology as a Strategic Decision 28
  The Unbroken Chain: The Fusion of Business and Technology 29
  Technology as a Business Driver 30
CONCLUSION 32
APPENDIX 34
  Definition of Information Technology Spending 34
  Methodology 35
OBJECTIVITY & METHODOLOGY 37

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