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April 27, 2015

IT budgets soar as retail banking recovers from crisis

Growth will boom in mobile as customer habits change, says Ovum.

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IT budgets in the global retail banking industry will reach $131bn (£86.5bn) in 2015, in a rise of more than 4% year-on-year according to the research firm Ovum.

The investment comes off the back of an improved economic outlook as the world recovers from the financial crisis, with the industry now set to focus on growth rather than reducing costs and remaining compliant.

Kieran Hines, practice lead of financial services technology at Ovum, said: "Many markets are witnessing their second or third wave of mobile and online banking platforms, with driving revenue becoming the prime priority.

"In the next round of major platform developments though, it will be the use of data analytics in real-time that will act as the key differentiator."

Ovum predicts that mobile banking will see the largest increase in investment, with total spending forecast to reach $4.2bn (£2.8bn) in a rise of 7.3%.

However spending on online banking will reach $10.8bn (£7.1bn) and multichannel integration will reach $7.3bn (£4.8bn) this year as companies seek to adapt to changing customer habits.

"In the rush that will undoubtedly occur to deliver front-office innovation to drive growth, banks must resist the temptation of short-term developments for quick revenue wins," Hines said.

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"Customer expectations will evolve and banks must ensure back-office agility is retained, meaning it’s able to deliver future innovations."

Though IT spending in retail banking will be led by Europe and North America, growth is predicted to be quickest in Asia, the Middle East and Africa, with the rise of Indian and Chinese banking thought to be influencing the change.

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