Financial Crisis Fails to Dampen Bank IT Spending
Financial Crisis Fails to Dampen Bank IT Spending
October 15, 2008: According to a new report from IDC’s Financial Insights, banks in Asia Pacific will continue to invest in technology despite the financial crisis.
Titled "Asian Banks Still Prepared to Invest in Technology Despite Crisis", the report is based on a survey conducted in the Asia/Pacific region as the crisis in the financial industry unfolded, and as bank executives assessed the impact of the crisis on their institutions.
It has found that while priorities have shifted, investment in technology will continue.
Almost 70 CIOs and senior IT decision-makers from top banks were surveyed, with a clear majority (69 percent) expecting IT investment budgets to grow in 2009. A further 16 percent expect spending to continue as is.
“We cite strong growth projections, but we also note significant shifts in the drivers of IT investments,” said Michael Araneta, senior research manager for Financial Insights Asia/Pacific. “Clearly, cost management has quickly risen to the top of the agenda. We see this in banks' intentions to closely scrutinise where investments are being made, and to more thoroughly define the intended benefits of IT projects. The first and easy recourse in the drive to cost management is to cut discretionary spending, especially in spending on telecommunications and hiring of contract staff.”
Financial Insights notes that an increasing number of projects relying on the synergy of multiple technology and business areas have been put on hold. With lines of business taking on a defensive stance, the momentum to think "long-term, enterprise-wide and strategic" has, to some extent, been stalled.
“IT initiatives that ensure the availability and performance of the bank's existing technology infrastructure will be a key area of focus,” adds Michael. “These will be where significant IT dollars are being spent. There is a growing focus on platform standardisation, security and counter-cyclical solutions such as risk technologies, collections and recovery systems, credit scoring systems, and portfolio and exposure analytics.”
According to the firm, another significant impact the financial crisis has highlighted is the availability of more A-Teams and mid-level to senior management personnel for Asia/Pacific projects.
“These executives were up to now tied up in huge, transformational projects in more mature markets in Europe and in the US. Even if contracted fees are maintained, and especially if contracts are set to a fixed price basis, the involvement of more experienced personnel in projects give an implicit price cut for Asia/Pacific clients,” said Shawn Yip, market analyst for Financial Insights Asia/Pacific. “They get more experienced people at lower fees.”
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