IDC: IT Spending Plans of Banks in Singapore Signal Recovery in Sector

Singapore-based banks have started to readjust their technology investment plans, reflecting a more positive outlook for the country's financial sector, according to the latest IDC Financial Insights Asia/Pacific report, entitled, "Market Analysis: Signals of Recovery in Singapore Banks' IT Investments".
According to IDC, the banks' plans for 2010 signal the return to long-term transformative projects that require significant investments in IT dollars, time, personnel and IT management resources.
"Projects concerning risk management, operational efficiency (IT optimization, virtualization and application standardization) and datacenter consolidation represent some of the highest-planned IT spend areas moving forward,” says Michael Araneta, senior consulting and research manager at IDC Financial Insights Asia/Pacific. “What marks a shift of IT priorities from the last two years is the return of projects that cover core banking, multi-channels and customer experience."
IDC Financial Insights notes that these re-emerging projects will allow banks to revisit the use of customer experience in building the banking business. Along with drastic economic conditions in 2008 and 2009, banks focused on protecting existing customer bases. Amidst the crisis, it was imperative for banks to more effectively understand customers within the current base, to have a comprehensive view of the customers' existing product holdings and interactions, and to see the drivers of cost and revenues within these relationships.
"As recovery takes shape, banks are reverting to initiatives that focus on achieving a single customer view to expand their customer bases and increase share of wallet,” adds Araneta. “They are thinking about other addressable markets. In addition, in the year ahead, banks will focus on customer accessibility and instant fulfillment at the customer touch points."
The report also points out that small, representative banking units in Singapore will invest in discrete solution areas, ranging from connectivity to their home core banking systems, remittance, anti-money laundering (AML) to compliance. By virtue of low investment bases, these smaller outfits will show the highest IT investment jumps in the market.
Meanwhile, the share of total IT spending undertaken by large international players is expected to further increase. In 2010, IT spending by large global players will comprise about 65% of total spending in the market. This is due to huge investments in infrastructure that will enable them to use Singapore as a hub to serve Asia-wide and even worldwide operations.
"Together with plans of Singapore's domestic banks to expand regional operations, these initiatives point to how Singapore banking will become yet more 'international' after the crisis,” remarks Araneta. “Consequently, banks have to quickly adapt to international best practices in IT strategy and IT management." IDC Financial Insights Asia/Pacific also recommends changes to IT vendor strategies.
"Vendor incumbents in other markets will have to build their presence and domain expertise in Singapore, which foreshadows an expansion of IT vendor teams and greater push towards effective vendor ecosystems in the island. Furthermore, the Singapore-based IT executive will become more influential, not only in regional architecture issues, but also in keeping significant hold of investment dollars," Araneta remarks.
The report further discusses how IT organizations have weathered the crisis by undertaking alternative approaches to the selection, procurement, pricing and delivery of IT capabilities. These include self-funded IT projects, SLA-based pricing, software-as-a-service, multi-vendor sourcing, leaseback models, and various other IT-optimization programs.

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