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Report Finds Banks Expect to Increase Technology Spending A new report has found that U.S. banks are turning away from short-term cost reduction technologies to more strategic investments with the goal of increasing returns. This is the finding of a new report by the American Bankers Association and TowerGroup. The report presents an Analysis of the industry from June to September 2003. According the the survey’s organizers, the findings indicate that banks will leverage customer relationships to increase revenues, and reduce costs by managing risks and improving efficiency of customer service.
While wholesale banking investments declined by 1.5% between 2002 and 2003, and wholesale banking investments scored only once among the top 10 technology investment priorities for both community and large banks, bankers did indicate an interest in increasing investment by 2004 by 5.7%.
“We believe the impact of strategic cost management over the past two years has changed the traditional relationship between maintenance and investment spending,” says Bob Landry, TowerGroup vice president of research and corporate development. “Banks will now be able to spend a larger portion of their IT dollars on investments that provide competitive advantage – rather than on maintenance spending that provides little differentiation.”
The top five lines of business technology investment priorities identified by the survey participants are branch, consumer credit origination, image and document management, consumer banking Internet sites, and financial control and risk management. Other factors driving the banks to focus more on technology spending are fraud reduction and enhancements to existing systems to support the increasing electronification of all payment processes. Most notable, according to the survey, are the investments to support the expanded use of check images enabled by the Check 21 Act. The report, “2003 Technology Spending and Investment Trends Report,” will be made available to the public in early November.
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