Banks face big spending on IT systems

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Banks which have patched up their information technology (IT) systems too often in recent years face big increases in spending to modernise their operations for the digital age.

Reuters reports that digital innovation should help offset the outlays by cutting the costs of new branches, which are likely to be 25% smaller and have a fifth fewer staff, according to a report from Deutsche Bank.

IT costs are likely to rise by about 10% over the next 10 years, broadly offset by a possible 5% fall in branch costs, analysts predicted.

'We expect a material increase in IT spend by banks over the next 10 years. Core systems are generally old and rely on too many applications patched too many times to cope with rising transaction volumes, regulatory change and digital channel changes in particular', Deutsche analysts Jason Napier and David Lock said in a note on Monday.

Investment banks and retail banks are already spending heavily on improving technology to cope with heavy regulation, demands to become more efficient and pressure to get ahead with digital platforms, Reuters reported in June.

The Deutsche analysts said there is much still to do, but those who move early can take advantage of higher volumes.

To access the complete Reuters article hit the link below

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