Bank's tech budgets slashed

Financial services companies are likely to trim back their technology budgets this year, so IT executives will have to find ways to free up funding for new investments.

Although spending by finance firms outstripped companies in other sectors during 2004 - with up to 8.4 per cent of their revenues dedicated to IT - spending by companies in the sector will drop by 2.1 per cent this year, Forrester Research predicts.

As a result IT executives will focus spending on finishing existing infrastructure consolidation projects, enterprise mobility and data centre automation.

The analyst said three out of five bank IT executives surveyed plan to invest in virtual private networks, while server virtualisation and storage information lifecycle management will also be high on the agenda.

Forrester associate analyst Manuel Mendez said: "IT departments will need to focus on generating more new IT investment budget for critical business objectives like customer acquisition and retention and for key IT initiatives like configuration management.”

The analyst's survey of 40 IT decision-makers at large European financial services firms found that networking and data centre automation technologies will be popular and application development outsourcing will increase.

Operating costs swallow up about 70 per cent of a company's IT budget and Forrester said one option is to outsource part of this maintenance to free up budget for new investments.

Financial services companies are also showing interest in technologies such as automated server patch management, server virtualisation, as well as automated server management and provisioning, the report found.