Despite the slumping economy, banks and insurers will increase spending on IT security and disaster recovery spending in 2002 due to heightened sensitivity following September 11. This extra security is needed, but winning budgetary approval will not be easy. eSecurity vendors will have to prove tangible evidence to win sales.
US financial service institutions are planning to increase eSecuity spending.
A new Datamonitor report, Retail Banking Quarterly Update, finds that financial services institutions in the US are increasingly aware of the significant disruption that can result from inadequate IT security. Many companies are taking action by re-evaluating their backup networks, investing in security and decentralized disaster recovery systems.
Experts predict that a major attack will be made on the US’ financial system sometime in the not too distant future. The vulnerability of financial systems is causing additional spending on security solutions. Antivirus and authentication software and decentralized solutions, such as storage area networks (SANs) and virtual private networks (VPNs), are being implemented or improved.
In an effort to generate returns on legacy technology investments, banks and billers will be increasing their marketing and education budgets for services such as electronic bill payment and presentment (EBPP). Datamonitor believes that over 10% of bills will be paid electronically by 2006. Vendors are looking to capitalize on this potentially lucrative market and since nine out of the top ten banks currently offer EBPP, it is rapidly becoming a survival application.
The success of technology vendors in 2002 will largely depend on measuring the improvements their technology can deliver within targeted business processes. Tangible measurements will enable business decision makers to link technology spending to ROI and lead to new project funding.
Due to the recent market slumps, information technology investments are under much greater scrutiny. Retail banking IT spending is estimated to increase by only 2.05% in the next four years. Consequently, IT ventures or products will have difficulty gaining approval unless vendors can provide hard evidence that they will either directly save or make the institution money.