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Tech spending by US banks to go up

USA cashUS banks are expected to increase spending on information technology services, says research firm Celent, which cited higher growth in the banking sector and improving economic fundamentals as the reasons for this higher spending. This spending is likely to continue into 2015 as they seek to invest in digital banking products, smartphone applications and social media to attract new customers. Technology spending by North American banks will grow from $56.9 billion in 2013 to $59.5 billion in 2014, Celent said. Spending is expected to climb slightly in 2015 to reach $62.2 billion, an increase of 4.6%. Mobile and tablet banking are priorities for many banks as they work on enhancing self service and digital sales capabilities, said the report. While the number of new projects is on the decline, midsize banks are looking at upgrading aging cash and treasury management solutions. Expectations of higher spending come in stark contrast to the outlook given by banks over the past two years, when macroeconomic uncertainties had forced them to cut down their IT budgets, added Celent. This had led to sluggish revenue growth and lower sales outlook from India’s top software outsourcing companies, which get almost 50% of their revenues from banking, financial services and insurance sector. While retail banking will see maximum technology investments, an increasing number of banks are also investing in IT security. Retail banking spending will grow 4.8% in 2014 to $31.8 billion, said the report.

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