Much of the IT spending in the Asian financial services industry (FSI) has been boosted by the need to replace ageing core banking systems, and a desire to support customer-centric programs.
Paul Kastner, Symantec's director of industry solutions, Asia-Pacific and Japan, said FSI companies are "hardening" their infrastructure by investing in high-availability applications, and standardizing the management of their data centre resources.
This way, Kastner explained in an e-mail interview, they can better manage risks associated with system failure and reduce the massive growth in storage and servers.
At the same time, banks and insurance companies are also investing on efforts to develop Internet-based customer delivery channels.
"The generation of consumers and business people who have grown up in the Internet age are as comfortable in a virtual world as many of us are in the physical world," said Kastner. "These consumers are the ones that want to perform banking transactions anywhere, anytime, through modes such as online and mobile banking."
Michael Araneta, IDC's Financial Insights senior manager of research, said key IT spending priorities among Asia's FSI organizations include customer relationship management (CRM), customer analytics, marketing, core banking systems and investments in data management. Investments also include infrastructure-related spending on equipment such as routers and switches.
Araneta told ZDNet Asia in an e-mail interview that spending priorities in some markets have also been shaped by regulations, such as the Basel II international banking standard, and other reporting requirements.
In fact, said Kastner, the increasing number of regulatory mandates is driving FSI providers in the Asia-Pacific region to invest more heavily in security and compliance.
"Outside of application refresh and replacement, financial services institutions in the region are spending more on information security and IT governance solutions," he said, citing findings from Deloitte & Touche's 2007 Global Security Survey.
"The areas that saw the largest spending growth included infrastructure protection devices. Also driving security spend is the need to support growth in Internet channels by ensuring robust security solutions, thereby, ensuring customer confidence and increased usage," he added.
Few big, many small
Araneta noted that some Asia markets, such as Taiwan and Indonesia, are generally "over-banked", where there are a few large players and a lot of small institutions.
"In these saturated markets, however, some banks have differentiated themselves very well and there are a few truly innovative banks--even though they may not necessarily be the biggest banks in the region," he said.
For example, Taiwan's Taishin International Bank developed a new salesforce automation tool for its telemarketing team that integrates different systems, covering the data warehouse, risk assessment system, credit bureau, computer telephony, SMS and the core banking system. This has allowed the bank to see a sharp increase in business booked through the new, cost-effective and customer-responsive channel, Araneta said.
|Even as customer centricity programs remain a priority, bank CIOs are increasingly concerned about justifying the cost of these 'customer experience' projects, especially because such programs might take time to show their benefits.|
|Michael Araneta , Financial Insights|
He noted that Bank Danamon Indonesia also leveraged smartcard and biometric technology to bring differentiated microfinance product offerings to Indonesia's micro-entrepreneurs. As a result, the bank's microfinance arm has shown strong growth over recent years and now plays a more significant role in the bank's market proposition.
But with the U.S. subprime woes and uncertain economy, cost management has been rearing its head more often in the past few months, said Araneta.
"Even as customer centricity programs remain a priority, bank CIOs are increasingly concerned about justifying the cost of these 'customer experience' projects, especially because such programs might take time to show their benefits," he said.
However, while the uncertain economic environment has changed things, it has not necessarily forced a reduction of IT budgets, he said.
Araneta explained: "What has happened is that the IT organization has refocused on making the best and most productive use of budgets, ensuring that recent technology investments are used as effectively as possible."
Kastner agreed, and pointed to a report by analyst firm Celent, which predicts that FSI IT spending in the Asia-Pacific region will continue its strong growth to reach US$94.5 billion in 2009.