The banking sector may seem relatively slow to adopt new technologies, largely because the information under its control is highly sensitive and can introduce significant risks if exposed or used incorrectly. For a long time, banks and other financial institutions placed a priority on data quality and reducing costs, as these strategies were among the only ways to improve operations.
Today, banks are taking a different approach to ensuring long-term success. Rather than solely focusing on implement advanced IT services to reduce costs, executives are looking to use innovative technologies to support a greater use of digital platforms, such as online and mobile banking, according to a new report by research firm Ovum.
The study found that banks around the world will spend more than $118 billion on IT in 2013, up 3.4 percent from 2012. North American banks in particular will increase spending by 3.3 percent as CIOs prioritize customer satisfaction and retention.
"The optimistic signs on the economic horizon are driving the shift away from cost-cutting and towards investment strategies within the retail banking sector," said Jaroslaw Knapik, senior analyst for financial services technology at Ovum. "Whilst regulatory compliance has certainly fuelled a significant amount of the investment predicted in the forecast, it is by no means the sole driver."
Embracing the ongoing mobile revolution
The advent of smartphones, tablets and other gadgets in and outside the private sector has spurred a new desire to leverage the gadgets for an increasing number of purposes. Ovum analysts noted that mobile banking is among the top IT investment priorities for 2013. This will largely be driven by executives trying to capitalize on advanced mobile capabilities like location-based services.
The report said the market for alternative banking channels, which include online and mobile solutions, will grow 6.7 percent in North America this year and continue expanding at a compound annual growth rate of more than 8 percent through 2017.
A separate report by BAI said financial institutions will also invest in multi-channel support strategies, allowing employees to cater to the needs of tech-savvy customers.
"The level of investment in digital channels gives a clear indication that banks are fully cognizant of the growing expectations of their customers, as well as the opportunities they present," Knapik said.
In the coming years, the banking industry will need to adapt to substantial changes taking place in the consumer landscape to keep clients satisfied. If an organization neglects mobile-enabled processes, it will likely experience significant obstacles.