Financial sector to target niche IT spending, say analysts

The financial sector will reserve IT spending this year for precise services and business areas, analysts have suggested.

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The financial sector will reserve IT spending this year for precise services and business areas, analysts have suggested.

Nervousness over the economy is causing banks in the UK to “rein back IT spend” overall, according to research firm Pierre Audoin Consultants. The firm has forecast that growth in banks’ software and services expenditure will slow to 4.6 percent, as opposed to a more rapid growth of 8.4 percent in 2007.

Banks would invest more in outsourcing in order to drive efficiency, but lower standard expenditure on systems integration, consulting and IT training.

The analyst group expects offshoring to rise as financial firms see opportunities to move some parts of their UK operations to locations like India. HSBC recently announced it will be shutting down its Scottish payments processing centre, PAC said, and credit card firm Capital One is axing 750 jobs at its operations in Nottingham and shifting most of the roles to offshore locations.

The findings support a recent CBI report that also predicted banks’ IT spending would slow as a result of difficult economic conditions.

Conversely, insurance firms will increase investment in customer relationship management software as competition becomea tougher, according to a new report by business intelligence vendor Datamonitor, called “CRM in Global Insurance”.

Datamonitor said insurers could “no longer afford to provide poor customer service, nor can they continue failing to understand each policyholder”.

More complex CRM systems were in demand, it said, in order to help insurers sell more effectively. The report added firms still had work to do to expand beyond their “core competency” of risk management, and focus on selling, and CRM would help them with this.