Banks in Singapore readjust technology investment plans
ConvergenceAsia staff
09/11/2009

Singapore-based banks have started to readjust their technology investment plans, reflecting a more positive outlook for the country's financial sector, according to the latest study by IDC Financial Insights Asia/Pacific. The banks' plans for 2010 signal the return to long-term transformative projects that require significant investments in IT dollars, as well as in time, personnel and IT management resources.

The report is based on inputs from senior IT and line-of-business executives from 15 Singapore-based banks who attended the recent IDC Financial Insights Banking Roundtable, as well as follow-up research on IT spending undertaken by IDC Financial Insights analysts in the region.

Michael Araneta, Senior Consulting and Research Manager at IDC Financial Insights Asia/Pacific, says, "Projects concerning risk management, operational efficiency (IT optimisation, virtualisation and application standardisation) and data centre consolidation represent some of the highest planned IT spend areas moving forward. What marks a shift of IT priorities from the last two years is the return of projects that cover core banking, multi-channels and customer experience."

The report also points out that small, representative banking units in Singapore will invest in discrete solution areas ranging from connectivity to their home core banking systems, remittance, anti-money laundering (AML) to compliance. By virtue of low investment bases, these smaller outfits will show highest IT investment jumps in the market.

Meanwhile, the share of total IT spending undertaken by large international players is expected to further increase. In 2010, IT spending by large global players will comprise about 65 per cent of total spending in the market. This is due to huge investments in infrastructure that will enable them to use Singapore as a hub to serve Asia-wide and even worldwide operations.

Araneta remarks, "Together with plans of Singapore's domestic banks to expand regional operations, these initiatives point to how Singapore banking will become yet more 'international' after the crisis. Consequently, banks have to quickly adapt to international best practices in IT strategy and IT management."

IDC Financial Insights Asia/Pacific also recommends changes to IT vendor strategies. "Vendor incumbents in other markets will have to build their presence and domain expertise in Singapore, which foreshadows an expansion of IT vendor teams and greater push towards effective vendor ecosystems in the island. Furthermore, the Singapore-based IT executive will become more influential, not only in regional architecture issues, but also in keeping significant hold of investment dollars," Araneta remarks.

The report further discusses how IT organisations have weathered the crisis by undertaking alternative approaches to the selection, procurement, pricing and delivery of IT capabilities. These include self-funded IT projects, SLA-based pricing, software-as-a-service, multi-vendor sourcing, leaseback models as well as various other IT optimisation programmes.

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