Banks are spending the majority of their IT budgets on maintenance and regulation rather than on new projects, according to research by CSC and Finextra.
The Computer Science Corporation (CSC), an IT Services Company headquartered in Virginia, partnered with Finextra to release a report titled, Redress the balance: How can IT leaders stop spending too much on ‘running the bank’ and start spending more on ‘changing the bank’?
The report revealed that 67% of budgets were devoted to current systems.
The current largest enterprise IT projects within banks are most commonly platform consolidation, making use of converged infrastructure systems, and core application upgrades, with a mix of in-house development and vendor software.
From the banks that were surveyed:
- 82% of the respondents said their ability to compete and/or innovate would suffer if they were forced to fund any growth in the IT budget allocated to changing the bank’s efficiency gains such as run-rate savings;
- 49% of respondents believe there are opportunities for new or expanded network-centric services for the industry that are not currently being served;
- 32% believe there are further opportunities for utilities that support the large ongoing regulatory compliance initiatives in the financial sector, and
- 35% of respondents already have some kind of utility that serves all parts of the organisation, in an attempt to move towards IT simplification.
Mike Steinharter, VP banking & capital markets at CSC, said: "The results confirm the challenges banks are facing today, particularly around improving efficiency.
"Capital requirements have become more stringent, and the regulatory burden is increasing costs across all areas of financial institutions, not least IT budgets. As such, banks need to find a solution that brings increased efficiencies to maintenance and compliance activities in order to reallocate budget to projects that can create business value."