IT service analysts Ovum said that banks' "clear IT investment priority in 2013" would be mobile banking. It said that European banks would spend approximately 4% more on mobile banking and 'other channels' for services than they did last year. 'Other channels' also refers to TV banking and banking through independent financial advisors or other third-party providers.
Banks expenditure in mobile banking and other channels will grow at a compound rate of 6% between 2013 and 2017, according to Ovum's research.
Ovum interviewed 250 senior retail banking IT executives employed by institutions based in Europe, North America and Asia-Pacific during October and November last year. The results of the survey are contained in Ovum's ‘Business Trends: Global Retail Banking Technology Investment Strategies’ report.
Retail banks are expected to spend on average 3.4% more on IT this year than they did in 2012, although in Europe the average rise will be just 1.8%, Ovum said. The total IT expenditure by banks this year will reach $118.6 billion, it said. Credit risk management and data privacy issues are the "key regulatory compliance drivers" behind the increased expenditure.
Other "significant priorities" for banks will be investment in IT for product development and marketing purposes, Ovum said.
"A focus on digital channels, such as online and mobile banking, and digital marketing activities, will enable [banks] to improve customer satisfaction and revenue growth strategies and fuel cross-selling and upselling opportunities in the short and mid-term," the analysts said in a statement.
"The optimistic signs on the economic horizon are driving the shift away from cost-cutting and towards investment strategies within the retail banking sector," Jaroslaw Knapik, a senior Ovum analyst on financial services technology, said. "Whilst regulatory compliance has certainly fuelled a significant amount of the investment predicted in our forecasts, it is by no means the sole driver. The level of investment in digital channels gives a clear indication that banks are fully cognisant of the growing expectations of their customers, as well as the opportunities they present."