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Banking increases its IT spending

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Worldwide IT spending in the banking environment is growing, with a 5,2% compound annual growth rate (CAGR).

This is according to a report from IDC Financial Insights, entitled “Worldwide IT Spending 2010–2015: Worldwide Banking IT Spending Guide, 1H12 Update”.

However the study also found that each region is facing very different condition as various macroeconomic factors have made an impact on the banking industry. Although internal IT forecasts across all regions and solution areas remain unchanged from the previous version of the guide, external IT forecasts in this spending guide have been adjusted.

Key report updates include:

* Europe: Due to growing concerns about the future of the Eurozone, forecasts for Europe have declined slightly. The CAGR for the forecast period now stands at 3,6%, compared with 4% in the previous forecast.

* North America: Forecasts for North America are a full percentage point higher than in the previous forecast. The CAGR for the forecast period is now at 3,7%, as US banks emerge from the financial crisis and Canadian banks continue their strategic investments.

* The rest of the world: This region includes bright spots such as Latin America and the Middle East, where initial investments in banking infrastructure continue to be very strong. In this region, IT spend will increase 10% in the forecast period.

* Asia/Pacific: IT spending forecasts are essentially unchanged from the previous forecast for the Asia/Pacific region. Over the forecast period, spending will increase with a CAGR of 7,9%.

In addition, IDC Financial Insights has added new categories of spend to better describe risk spending categories for insurance and capital market institutions. Categories have been expanded to include compliance and control, credit risk, enterprise risk management, financial crimes, information security, and liquidity and asset liability management.

“The global economy will continue to flounder in 2012 as the crisis in Western Europe casts a long shadow. As a result, many banks are taking a closer look at their expense budgets as they consider new IT investments,” says Jeanne Capachin, vice-president of IDC Financial Insights. “However, there are bright spots as the Middle East remains a strong growth market for financial services technology and the adoption of public cloud services among US banks has surfaced as a way to innovate despite tight IT spending controls.”