Compliance Drives Retail Bank IT Spending

This is up from 2004, when 3.8 percent of total IT spending went toward compliance initiatives. Spending will continue to grow in 2006 when compliance is expected to eat up 4.6 percent of the total IT budget. The study, US Retail Banking Technology Spending, conducted by Datamonitor, presents the views of 100 IT decision makers to identify strategy drivers for 2005. “The wave of banking regulation enacted over the past several years is exacting a heavy operational and cost tool on the US banking industry,” said Edward Blomquist, financial services technology analyst at Datamonitor and author of the study. “Efforts to comply have supplanted core operations and branch renewal as leading concerns of both business and IT managers.” According to Blomquist, legislation such as the Patriot Act of 2001, the Sarbanes-Oxley Act of 2002, the Fair and the Basel II accord have forced banks to exert greater control on everything from consumer privacy, credit and identity theft, corporate corruption and risk management. The study also pointed out banks are finding ad hoc solutions inadequate and are looking for ways to integrate compliance within their IT strategies.