Banks to raise IT spending to over €11bn

19 April 2005

2 minute read

Banks to raise IT spending to over €11bn

The European market for front-office technology will increase by 15% from 2003's level, according to Kimsey, whose last IT report was published two years ago.

Stephen Kimsey, founder and lead researcher, said: "Our analysis reinforces the general opinion that demand for trading technology products and services is picking up again. We estimate that spend is running at around 15% higher than in 2003 and we would expect this trend to continue - at least for the next two years."

The report is a boost for the financial services IT industry, which has been struggling to regain the heights of IT investment seen in the late 1990s.

"The expansion of the European market for trading technology came to an abrupt halt in the early years of the new century, caused by many factors, including September 11, 2001 and a global bear market in equities," said Kimsey.

Financial groups have since shied away from direct investment in new front-office IT systems, preferring to upgrade their existing systems or repair older ones for considerably less cost. As a result, IT vendors launched short-term, lower cost, repair packages to stimulate sales and compete for a share in diminishing IT budgets.

As well as painting a rosy picture for the European financial IT market, the report said the UK was the dominant market for IT investment in Europe and accounts for about 23% of the pan-European spend on trading technology systems.

Kimsey said despite its dominance, the UK, with France and Germany, remains stable in terms of year-on-year market share. By contrast, the Czech Republic, Slovakia, Hungary, Poland, Latvia, Estonia and Lithuania "look like growth areas, demonstrating a comparative level of investment compared with the older, established markets in Europe".

Kimsey said eastern Europe's emerging markets were likely to continue to grow at a faster rate, albeit from a smaller base, than established western European ones.

He said: "We would expect much of the demand for trading technology in these markets to be driven by foreign firms as they grow their regional business."