In a piece of good news for bank IT staffs and financial technology vendors, IDC Financial Insights has reviewed the U.S. bank IT spending forecast it made in January and revised it up. The Framingham, Mass.-based analyst firm now expects North American bank IT budgets to grow at a compound annual growth rate of 3.7 percent until 2015.
The logic behind the optimism? "We're seeing some innovation projects get funding," says Jeanne Capachin, research vice president. Examples include investments in online banking portals, mobile banking projects, and branch renovations. "Some strong regional banks are starting to look across their product sets and make investments," she says. "It's not just IT, they're hiring staff, too. When we see those two go hand in hand, we think the banks are feeling less cautious, they're feeling they've done everything they need to with regulation, they've gotten their houses in order, now they can start to move forward and make bigger investments."
Community banks are also spending more, Capachin believes. "The stronger community banks are doing ok, although some are dragged down by some tough portfolios they're still holding on to," she says. "The big banks are still struggling," she notes.
As to what U.S. banks are buying, Capachin says security is a big category with strong growth rates. Enterprise risk management and data management are two other major growth areas. "Regulatory compliance is big right now but has a lower growth rate than enterprise risk management and security, where banks are perennially spending," she says.