The Asia-Pacific region will see the biggest increase worldwide in spending on retail banking technology by 2015, growing 49 percent to hit US$28.1 billion, revealed a new study.
In a report released Wednesday, research firm Ovum said the bulk of investments will be pumped into areas that save cost and improve customer service such as online and mobile banking. With Asia-Pacific leading the pack, global expenditure on retail banking technology will total US$132 billion in 2015, marking a 24 percent growth over the next five years.
Within the region, Japan will account for the largest share at US$9 billion in 2015, Ovum noted. The remaining countries predicted to make the top five are China at US$7.8 billion, India (US$2.7 billion), Australia (US$2.7 billion), and South Korea (US$1.5 billion). Singapore's retail bank sector will hit US$427 million, according to the research house.
The increase in technology spend as banks set up new branches in less-saturated markets across the region will drive the growth of emerging markets, Knapik explained. According to Ovum, branch tech spending in emergent Asia will jump 53 percent to reach US$1.9 billion within the next five years.
Online, mobile banking
The research firm stated that the surge in investments will be fuelled by the banking industry's need to grow revenues and improve customer trust. This would explain the heavier spending on areas such as online and mobile banking, technology in branches in emerging markets including China and India, and channel integration, it noted.
It added that investments in Internet banking will grow 39 percent from 2010 to 2015 to hit US$1.8 billion.
Knapik said banks will be pumping money into online platforms, extending into mobile devices and tablets because these can help service clients at a lower cost.
Investments will also be poured into technologies that allow "smarter" selling and servicing, such as customer analytics and channel integration, he said.
The Ovum analyst highlighted that as banks face ever-increasing regulatory requirements, they will be driven to invest in technologies that help them reduce costs, such as data management, business intelligence and analytics.
Over the next five years, spending on mid-office components such as risk management, anti-fraud, compliance and performance management based on cost-efficient technologies, will grow by 51 percent to hit US$650 million in emerging Asia-Pacific markets, and by 28 percent to reach US$1.1 billion in developed economies in the region, Ovum estimated.