This report presents the findings from a survey of 131 retail banks regarding their Information & Communication Technology (ICT) budgets and staff allocation. The survey investigates how retail banks currently allocate their ICT budgets across the core areas of ICT spend, namely hardware, software, IT services, communications and consulting.
Introduction and Landscape
Why was the report written?
In order to provide a depth of insight into ICT vendors' and service providers' potential customers.
What is the current market landscape and what is changing?
ICT expenditure is a significant portion of operational spending in the retail banking industry. With business process streamlining a key priority, retail banks are increasing their ICT spending to improve their operational efficiency and customer service by making investments in the likes of enterprise applications.
What are the key drivers behind recent market changes?
Trends such as online banking, mobile banking, and personalised services are primarily influencing the ICT investments in this sector. Increasing compliance regulations are also compelling retail banks to invest in content management and IT security solutions.
What makes this report unique and essential to read?
Kable Global ICT Intelligence has invested significant resources in order to interview CIOs and IT managers about their IT Budgets. Very few IT analyst houses will have interviewed 130+ ICT decision makers in the retail banking industry in H2 2012.
Key Features and Benefits
Understand how ICT budgets are set to change in 2013 in terms of their overall size.
Appreciate how budgets are allocated across the core elements of ICT spend, including hardware, software, services, communications and consulting.
Learn how ICT money is being spent in areas such as the data centre, applications, IT management and the network.
Establish how IT staff are typically allocated within retail banks.
Gain insight into with whom retail banks plan to spend their ICT money.
Key Market Issues
As large volumes of transactional content generated on a daily basis, retail banks will continue to allocate the largest proportion of their total ICT budgets to their data centres in 2013.
Retail banks' ICT budget allocation for internal development and maintenance is expected to remain high in 2013 and 2012, with most banks strengthening their internal ICT infrastructure in order to improve and automate their business processes.
Retail banks are also allocating a significant proportion of their hardware budgets to security in order to deal with the growing incidences of cybercrime and prevent the loss of business critical data as well as customers' crucial financial information.
Kable's survey shows that retail banks are planning to increase their software budget allocations in order to improve their business efficiency and customer service functions.
Retail banks' spending on application development and integration services largely revolves around using IT services providers to make key architectural changes and upgrade their core banking platforms.
Kable's survey shows that retail banks' hardware budgets are dominated by spending on clients, with average allocation of 16% to this category.
Retail banks are gradually moving towards a cloud environment, which is evident from the survey with respondents allocating 21% of their software budgets to software as a service (SaaS).
A large proportion of retail banks' software budgets was spent on enterprise applications in 2012, signifying huge demand for IT vendors offering such solutions in the banking sector.
Retail banks are allocating 35% of their IT consulting budgets to systems planning & design consulting, creating decent opportunities for IT services firms offering such services.
According to Kable's survey, fixed voice communications still receive the largest share of retail banks' telecommunications budgets, driven by services such as tele-banking and help desks.
1 Trends in ICT budgets
1.2 Survey demographics
1.3 ICT budget changes
1.4 ICT budget allocation by core technology area
1.5 ICT budget allocation by function
1.6 ICT spending by entity
1.7 IT staff distribution
2 Detailed ICT budget allocations
2.2 Hardware budget breakdown
2.3 Software budget breakdowns
2.4 Third party IT services expenditure
2.5 Telecommunications budget
3.1 Retail banks' ICT investments are being driven by their efforts to modernise and automate their business operations
4.2 Further reading
4.3 Contact the authors
List of Tables
Table 1: Retail banking - enterprise ICT survey geographic breakdown
Table 2: Retail banking - enterprise ICT survey breakdown by size band (number of employees)
Table 3: Recent and expected ICT budget changes among retail banks
Table 4: Retail banks' (external) ICT budget allocation, 2012 and 2013
Table 5: Retail banks' ICT budget allocation by function, 2012 and 2013
Table 6: Retail banks' (external) ICT budget allocation by entity, 2012 and 2013
Table 7: Average allocation of full-time IT staff members in retail banks
Table 8: Retail banks' average hardware budget allocation
Table 9: Average allocation of software budgets in retail banks
Table 10: Retail banks' average software budget allocation by technology
Table 11: Retail banks' average IT services budget allocation
Table 12: Retail banks' average IT consulting services budget allocation
Table 13: Retail banks' average telecommunications budget allocation
List of Figures
Figure 1: Retail banking - enterprise ICT survey geographic breakdown
Figure 2: Retail banking - enterprise ICT survey breakdown by size band (number of employees)
Figure 3: Recent and expected ICT budget changes among retail banks
Figure 4: Retail banks' (external) ICT budget allocation, 2012 and 2013
Figure 5: Retail banks' ICT budget allocation by function, 2012 and 2013
Figure 6: Retail banks' ICT budget allocation by entity, 2012 and 2013
Figure 7: Average allocation of full-time IT staff members in retail banks
Figure 8: Retail banks' average hardware budget allocation
Figure 9: Average allocation of software budgets in retail banks
Figure 10: Retail banks' average software budget allocation by technology
Figure 11: Retail banks' average IT services budget allocation
Figure 12: Retail banks' average IT consulting services budget allocation
Figure 13: Retail banks' average telecommunications budget allocation