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IT spending boost piles pressure on bank CIOs
More money but lots more headaches...

By Steve Ranger

Published: Friday 01 July 2005

CIOs are coming under the spotlight as banks race to adapt to difficult market conditions and put IT at the heart of new initiatives.

Analyst Financial Insights said the European banking landscape is rapidly changing and banks are increasingly concerned about the future.

With CEOs under pressure to discover new ways to increase their profitability, CIOs are under the spotlight, the analyst said.

"In banking, technology is the foundation for every new initiative, and CIOs need to respond faster and more efficiently to new requirements. Solving this dilemma is the challenge for CIOs as well as for IT vendors that can exploit this opportunity to really show the value of IT in the banking environment," the analyst said in a research report titled European IT Opportunity: Financial Services.

Financial Insights predicts that banks will either try to boost volumes of customers or work on "customer proximity" by trying to anticipate customers' changing needs.

It said: "Many banks are restructuring their value chain to extract more value from customers and to facilitate the generation of new streams of revenue. In either case, IT will become even more critical and will have to be more tied to business decisions than in the past because banks now recognise the major importance of having IT systems that support their business strengths."

As a result Financial Insights predicts the spending on IT by banks in western Europe will increase by a compound average growth rate of 4.8 per cent over the next five years - making banks very attractive to IT vendors.

Daniele Bonfanti, programme manager for the report, added: "The consolidation process that is underway is changing the structure of the banking system. At the same time, banks are revising their way of doing business and reorganising their value chain.

"These elements will bring significant consequences for IT vendors, which will need to become real partners helping banks develop IT strategies that can create real value in an increasingly complex market."