In the sixth annual edition of the “Bankers As Buyers” survey put out by the William Mills Agency there was a lot of bleak news about technology spending this year. The survey is a collection of research, observations and articles about what technology, solutions and services bankers will buy in 2009 and the changing financial industry landscape. It was a good read, in my opinion. While this news is causing some technology vendors to panic, it really shouldn’t, and I’ll tell you why.
First, in the survey Jeanne Capachin, Research Vice President, Global Banking at Financial Insights, an IDC Company penned an article. She said, “Financial Insights is predicting an overall reduction in IT spending for North American banking in 2009. This will mark that for the first time negative growth has been forecast for the industry since Financial Insights and its predecessor firm started forecasting IT spending. This industry has been very resilient, even weathering the 2002 downturn in IT spending with continuing growth that was not seen in the overall IT industry.”
In all, Financial Insights predicts negative growth in IT spending over the next five-year period, with the biggest hit occurring in 2009. By the numbers, in 2009 Financial Insights is projecting a 4% decline in IT spending compared with adjusted 2008 levels for the North American banking industry.
Ms. Capachin notes, “hardware purchases will be hardest hit. Banks will delay replacement purchases as long as possible and will not undertake big new infrastructure projects.” She goes on to conclude that, “For those firms serving the financial services industry, 2009 will be the most difficult year ever.”
So, where’s the silver lining? Tier 2 banks will be relatively unscathed by the credit crisis and acquisitions, according to Ms. Capachin. Spending by these banks will inch toward the positive, ending the five-year forecast period with growth of 0.1%. “Credit unions will fare well, and except for the smallest institutions — where the ranks are diminishing steadily — they will increase spending as well,” she said.
So where will lenders be spending? The report indicates lenders will be spending on integrating acquired assets, identifying and managing risks, controlling costs both capital and operational, and retaining and acquiring customers. In talking directly to vendors, Ms. Capachin stressed, “It will take deft skills and a deep understanding of buyer requirements to weather the storm in 2009.”
There’s the challenge my vendor readers. Prove your worth. Lenders are looking to improve the process and they will buy technology if it gets them there fast. I have confidence that vendors will step up to this challenge and meet it head on. What do you think, are technology vendors up for this?
