1. Regulatory. Rep. Barney Frank is planning to retire after his next term, but the financial reform package that bears his name lives on. Many of the interpretations of the Dodd-Frank and changes to Regulation Z will emerge this year. Tech projects tied to the Durbin amendment will get under way soon. Not only will the new laws require banks to improve their disclosures and reports, but the new rules will affect payments technology, data storage and technology used to develop loyalty rewards programs, which are expected to increase in importance as Durbin squeezes traditional fees. "This is a 'must' spend, so when banks look at their investment strategy, this is the first thing they have to satisfy," says Wayne Busch, a senior executive leading Accenture's North American banking practice.

2. Security. It may seem like an obvious area of IT spending, but security is one of the few line items getting money without a lot of constraints, and Internet crime and data theft aren't going away. Banks are likely to spend on software to prevent breaches and control access to data, with a particular focus on multifactor authentication and new encryption techniques such as format-preserving encryption, or a stronger means of protecting cardholder data: by using a replacement number that has the same number of digits as the real data figure, and cross-department integration of previously siloed data loss prevention.

"Anything that's security-related will get attention," says Jacob Jegher, a senior analyst at Celent. He says one bank exec told him that "he had an unlimited amount of money" when it came to security and data loss mitigation. "He could get anything he wanted if he could prove that it was protecting the bank's data."

3. Governance, risk and compliance. The focus on compliance and security will be a boon for any company that sells solutions in the governance, risk and compliance arena, which is good news for firms like Oracle, SAP and SAS."Whether it's a holistic platform, a service company or a point solution, GRC's going to be in high demand," says Jim Washburn, global practice leader for core banking for Cap Gemini Financial Services. GRC-related expense can take up to 50% of a bank's overall IT budget, he says. "And that will come at the expense of flat or slow overall IT growth."

4. Mobile banking. The days of offering simple information and rudimentary transfers on mobile devices is long gone, and banks will expand mobile capabilities, harnessing the innovative power of the actual devices. For customers, that means lots of new person-to-person applications, mobile remote deposit capture and exposure to GPS-enabled marketing. And for internal staff it means more initiatives to allow remote sales and new account onboarding via connections to their bank's IT network. But it's the ability of the mobile phone to deliver on-the-spot personalized messages to users that will be the big score for 2012.

"In interviews with the 10 largest banks, 10 of 10 suggest the most important investment in the mobile platform is in marketing," says Carl Tsukahara, CMO of ClairMail.

5. Mobile payments. The battle over who controls the gateway to the coming multitrillion-dollar, NFC-driven contactless payments market will rage unabated into the year ahead, with Isis, handset manufacturers, PayPal, Google and other participants jockeying for position. Adoption trends suggest a large market is at stake. A recent study by MasterCard found two-thirds (62%) of Americans who use a mobile phone would be open to using their device to make purchases wherever their errands may take them. And Aite Group Mobile says the pay-by-phone market will tally $22 billion in transactions by 2015.

Card payments may also lead to IT investment as moves by card networks to push chip-and-PIN standards may force US banks and merchants to consider costly upgrades. "Visa's push on EMV in the U.S. will force some spending in that area," says Gwenn Bezard, research director at Aite Group.

6. Cloud computing. e Banks have been reluctant to adopt outsourced IT delivery modes such as cloud computing because of concerns over reliability and security. That's starting to change. Economic pressures are likely to nudge banks further into the cloud.

"Those [security and accessibility] concerns are still there," says Lisa Kart, a research director for Gartner. She says that cloud computing will still be used primarily for non-customer-data-intense applications, and that encryption techniques have improved and service-level agreements have become more detailed. "Banks are starting to be more influenced by the potential benefits, the cost savings and the ease of deployment."

7. Data management. Data projects of all sorts abound in the in the financial services industry, which means spending on CRM and middleware will increase as banks link disparate business lines together for single-view purposes. Also to be expected is a dramatic increase in data storage requirements from regulatory requirements, along with the need to improve cross-sales and customer service.

"The retail banking climate in the U.S. is dismal, and it's a bit of a struggle right now," Jegher says. "Banks that do have some money set aside are going to be investing in things that will lower the cost of transactions and interaction. Online sales and online account openings, cross-selling, a lot of that is based on data analysis. And these are large projects that won't be started and completed in 2012 alone."

8. Social media. e The growth of social media will be less a matter of throwing tons of money at networking sites - social media doesn't cost a whole lot - than an exploration of how the information that pours into the sites can be mined, learned from and monetized. Consumers express tastes, attitudes and their activities on social networking sites, all information that can be used to better understand what they want to do and when. And, most importantly, they often share how they feel about their bank.

Banks are increasingly using social media as part of marketing, lead generation and contests; U.S. Bank has used it to reach out to business clients.

"Banks are going to move beyond just using social media to managing it," says Nicole Sturgill, research director for TowerGroup. "That means more use of sentiment monitoring and content management tools."

9. Treasury software. Corporate cash management is ripe for new technology. Automation for corporate payments and remote deposit capture is less mature than the consumer market and the segment is performing better than retail banking.

In 2012, analysts say, spending will be particularly focused on enhancing mobility for executives looking to approve transaction, T&E apps that connect to accounts payable and tablet apps for sales staff. "It's the most lucrative portion of the banking market," Jegher says.

10. Branch technology. Digital signage is making a comeback at banks such as Huntington. But that's only one advancement taking off in the branch, where innovation such as teller capture will become mainstream in 2012. Mobile devices, particularly tablets like the iPad, will be considered as a way to allow in-branch service and sales reps to engage with consumers without having to turn away to look at paper brochures or a PC monitor.

"There is a strong consumer side to the tablet, which can be brought into the branch," Sturgill says. "It can be used instead of paper to open new accounts and serve customers while they are with a rep."