Tower predicts bank IT spending will grow

New research from the Tower Group, a Boston-based consultancy, concludes that despite an intense focus on cost-cutting at banks, IT spending will grow modestly over the next three years. While many believe the banking sector's malaise will continue to depress IT spending, Tower argues that EU institutions will spend on technology to drive down the cost of operations.

Tower projects that total EU IT spending will decline slightly this year from 2002's levels, due largely to divestitures and outsourcing deals in Germany, where banks are seeking immediate cost savings. But in a pan-EU analysis, Tower says IT spending will grow over the next three years, from a total of Eur97.9 billion this year to Eur107.8 billion in 2006.

Virginia Garcia, a senior analyst at Tower, says IT spending will be driven by business objectives including operational efficiency, higher customer retention rates, risk mitigation and cost management.

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