Seventy-two per cent of small and mid-sized banks plan to increase security software spending and 59 per cent plan to increase security hardware spending this year, according to IT research firm Info-Tech Research Group. This investment in security technology is being fuelled by a focus on privacy issues, transaction security and regulatory compliance, says the London, Ont. firm.
In Info-Tech’s Banking Industry: 2005 IT Budget and Staffing Report, (which included commercial, savings and loans banks and credit unions), not one IT decision maker in small and mid-sized banks indicated that they would be cutting security software or hardware spending. In comparison, seven per cent of real estate respondents and six per cent of insurance respondents said they plan to cut security spending.
The survey of more than 1,400 IT decision makers across 10 broad industry sectors found that 46 per cent of small and mid-sized banks intend to increase their overall IT spending in 2005.
“The requirements of Check 21 and eventual cost savings available through VoIP are driving increased technology investment by the banks,” Terry Ouellette, Info-Tech senior research analyst said in a statement. “Both commercial and non-commercial banks are following the trends we’re seeing in other industries, trends like investment in VoIP and storage area networks.”
The survey also revealed:
? spending on CRM, data mining, business intelligence, servers and data warehousing all rank highly, reflecting the ‘know your customer’ initiative in banking;
? strong spending in storage area networks (SANs) and network management systems likely reflects response to Check 21 and the increasing connectivity needs between consumers and branches.
? 99 per cent of IT professionals in banks view the current economic situation as satisfactory or better.
? banking is well ahead of most other industries with 78 per cent experiencing medium to high growth. By contrast, across other industries 76 per cent are experiencing low to medium growth. Only the construction industry has had a higher growth rate than financial services.
? two thirds of enterprises with over $150 million in revenue are increasing their IT spend, and no enterprises in this size range are experiencing a decreasing budget. Fully 29 per cent of banks with under $10 million in revenue are experiencing IT budget cuts.
? banks spend a smaller proportion of IT budgets on operations, and a higher proportion on capital, than the average of other industries. In the bank operations-to-capital ratio, only 61 per cent is allocated to ongoing operations. Banks show the lowest ratios within the financial services sectors, perhaps a reflection of the high capital cost of continuing technology change required in the banking environment.
