Banks are big spenders on IT: Informationweek

InformationWeek

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It wasn’t that long ago that Doug Duncan, then chief economist for the Mortgage Bankers Association, was telling audiences how awful the U.S. financial services industry was at spending money on technology. He was right at the time, with banks spending much less than other industries and mortgage bankers spending, on average, about one-tenth as much as other business sectors. But times are changing.

In its examination of IT spending habits in the nation’s top 10 industries, Informationweek has concluded that banks are the new promised land for those who want to sell technology, especially if that tech is related to security.

“As a percentage of total revenue, no industry spends more on IT than banking and financial services,” said Paul McDougall in his article. He wrote that financial institutions will spend about 8 percent of total sales on IT this year. That compares to 2.4 percent for all industries.
But before you get all excited, you should know that the publication admitted that its data was collected “before the full brunt of the mortgage meltdown hit.” Of course, the downturn has had little impact on banks’ needs to keep information secure. Informationweek says that IT risk management was the No. 1 priority for all industries it surveyed, including banking.

Most interesting to me, the study showed a whopping 63 percent of banks say they have investigated Web 2.0 development tools, at least in a limited way, and 23 percent say that more than half of internal workers have access to the tools. While these institutions don’t really have a history of effective communication with their target customers, it’s good to know that they are investigating the technology required to get those conversations going.

But Duncan is still right in at least one respect. According to InformationWeek, while banks may spend a lot on IT, the percentage of their budgets that they set aside for actual Research & Development is still only about 5 percent,

In its September issue, eWeek had a somewhat dimmer view of IT spending in the months ahead. According to Forrester Research, growth in U.S. IT purchases will slow in 2008-2009, with growth picking up again in 2010 and beyond, the publication reported. Even so, total expenditures on IT, including services, software, hardware and communications equipment, is expected to rise to $667 billion in 2010, up from $542 billion in 2007 and an estimated $572 this year.

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This entry was posted on Monday, October 20th, 2008 at 7:03 pm and is filed under in the news. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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