Australia's major banks will continue to pursue huge technology projects that will fuel local IT spending for the next few years despite the global financial crisis, according to a leading local analyst.
The economic disaster has resulted in chaos in the international financial services community, with several US giants hitting the wall, a partial nationalisation of eight banks in the UK and the Commonwealth Bank of Australia (CBA) buying local group BankWest. Tier two Australian bank and insurance firm Suncorp is also currently up for grabs.
The issues have created a sizable debate within Australia's IT industry about whether local IT spending will hit the wall, especially in sectors like government and financial services.
But Gartner's managing vice president of its North Sydney office, Ian Bertram told ZDNet.com.au that the banking sector, at least, would still be putting its hand in its pocket for projects. He said all indications were that no Australian bank was at this stage backing down from their key technology investments, especially the ongoing upgrade of core banking systems.
Ian Bertram
(Credit: Gartner)
"Keep in mind that with CBA buying BankWest, with Suncorp potentially on the table, with Westpac looking to acquire St George, where do you think they'll be spending their money?" he said.
Over the past few months both CBA and the National Australia Bank have outlined core banking system replacement strategies that are likely to cost hundreds of millions of dollars each. Australia and New Zealand Banking Group is believed to be considering its options, with similar IT investments in the Asia-Pacific region.
Westpac has also hired former CBA CIO Bob McKinnon ahead of what is expected to be an extensive IT integration project flowing from its pending acquisition of Australia's fifth-largest bank, St George.
"I can't see IT spending among the banks going south," Bertram said. "If anything it will go north."
Well, a feature of a recession is that money stops moving around the community and settles in big business bank accounts.
Pursuing IT development in such times is a way of unlocking this money and the community.