The comparative performance of US and international banks during 2003 reveals a drive to increase revenues. Many are operating in a cost-containment mode but some have started to invest in customer-oriented technologies that help to grow their businesses organically.
A few banks have attained significant gains in their efficiency ratio and in customer revenues. Most have to improve efficiency ratios further and are concerned about the overhead required to comply with multiple regulatory mandates. Therefore, banks have been replacing or transforming IT systems that burden operations and hamper delivering competitive value to customers.
TowerGroup estimates that financial services institutions are investing $39bn globally in 2004 (12% of their IT spending) to overhaul legacy systems. As more flexible IT solutions become imperative, it is estimated that these investments grow at 9.7% annually in the next five years.
Guillermo Kopp is director, financial services strategies & IT investments practice at TowerGroup
