By Matthew Southwell / ITP (The Information & Technology Publishing Co. Ltd.)
Although the ripple effect of the global economic slow down has forced many companies in the Middle East to reign in their IT spending or shelve certain projects, the region’s banking sector continues to spend heavily on technology.
With the past month alone, a number of Dubai-based banks have announced plans to either extend their customer service or consolidate their IT infrastructure. For example, Emirates Bank International (EBI) has invested in BEA’s WebLogic Platform 7.0 to ensure the seamless integration of its multiple IT systems, while Dubai Islamic Bank (DIB) has unveiled an Arabic language Short Messaging Service (SMS) banking service, called Al Islami Mobile banking. Both initiatives are designed to improve customer service levels, build internal efficiencies and, in short, make the banks better than their rivals.
These practical examples are supported by the latest figures from MENAFN Research, which reports that retail financial institutions in the GCC and Levant region will spend more on IT in 2003 than ever before. 70% of the financial institutions surveyed by the company said they would raise their IT budgets this year, with one third specifying that this increase would be somewhere between five and 15%.
“MENAFN Research attributes the increase in IT budgets by regional institutions to several factors that include the important role technology plays in the financial services sector and the fact that many regional banks increasingly view IT as a competitive differentiator,” states the market research firm.
Further evidence of the local banking sector’s spending prowess comes from Madar Research, which reports that Kuwait’s financial community has a combined IT budget of approximately US$25 million. And, although this figure is low compared to US standards, the analyst house says that the figure “constitutes a substantial increase over previous years, and IT spending is set for more growth, which could eventually match the Western average with a three year period.”
“Small banks, as well as large ones, are each spending between US$1 million and US$3 million annually on hardware, software, computer systems, networks, solutions and IT staff and maintenance,” it adds.
MENAFN Research is more specific about where exactly the region’s banking community is investing its IT budget, as it reports that customer relationship management (CRM), Islamic banking technology and business continuity projects are currently topping the wish list of local finance houses.