SINGAPORE, 14 OCTOBER 2008 -- Asia-Pacific banks will continue to focus on IT investments despite the ongoing crisis in the financial services industry, according to IDC company, Financial Insights (FI).
FI surveyed some 70 regional CIOs and senior IT decision-makers in top banks as the global financial crisis unfolded. Results showed that the majority of respondents (69 per cent) still expect IT investment budgets to grow in 2009 compared with 2008. Fifteen per cent and 16 per cent indicated reduced and unchanged IT budgets respectively.
"We cite strong growth projections, but we also note significant shifts in the drivers of IT investments,” said Michael Araneta, senior research manager, Financial Insights Asia-Pacific. “Clearly, cost management has quickly risen to the top of the agenda.”
Araneta noted that regional banks are scrutinising where investments are being made, and are seeking to more thoroughly define intended benefits of IT projects. “The first and easy recourse in the drive to cost management is to cut discretionary spending, especially on telecommunications and hiring of contract staff," he said.
Shifts in IT spending
More Asia-Pacific projects relying on the synergy of multiple technology and business areas have been put on hold, according to FI.
IT initiatives that ensure availability and performance of the bank's existing technology infrastructure will be a key area of investment focus, Araneta said. He noted in particular, a growing focus on platform standardisation, security and counter-cyclical solutions, collections and recovery systems, credit scoring systems, and portfolio and exposure analytics.
Technology vendors have also responded to the financial crisis by meeting clients’ cost management agendas. Changes include conversion of headcount-linked contracts to fixed-price contracts, and staggering of contract payments through a longer time horizon.
"Another significant impact from the crisis is the availability of more A-Teams and mid-level to senior management personnel for Asia-Pacific projects,” said Shawn Yip, market analyst, Financial Insights Asia-Pacific. “These executives were up to now, tied up in huge, transformational projects in more mature markets in Europe and the US.”
Yip said that consequently, Asia-Pacific clients get “an implicit price cut” for access to more experienced expertise even if contracted fees were maintained.
