Retail banks on the mainland are primed to increase spending on information technology hardware, software and services to more than US$6 billion this year in an attempt to maintain steady growth.
'The technology investments will be mainly driven by the need to grow revenue,' said Jaroslaw Knapik, a senior analyst at British market research firm Ovum.
According to Ovum, information technology investment by retail banks on the mainland will rise 8.8 per cent to US$6.2 billion this year from an estimated US$5.7 billion last year. By comparison, retail banks in Hong Kong are projected to boost information technology spending by 6 per cent to US$639 million from US$601 million.
'Top spenders in both markets are typically the largest banks in terms of the number of branches, automated-teller machines, accounts and other operations,' Knapik said yesterday.
The Big Four state-owned banks are Bank of China, China Construction Bank, Agricultural Bank of China and Industrial and Commercial Bank of China (ICBC).
Investments on ATMs, for example, are forecast this year to be worth US$685 million on the mainland and US$47 million in Hong Kong.
'Regulatory demands are also forcing banks to invest in their core systems,' Knapik said. A core banking system represents the software package used to support a bank's most common transactions, such as making and processing loans, customer relations management activities, calculating interest rates and keeping records of transactions.
Ovum estimated spending on core systems by mainland banks this year will hit US$830 million, while similar investment in Hong Kong is predicted to total US$98 million.
Celent, a US-based financial research and consulting firm, said major domestic suppliers of information technology systems in the mainland banking industry included Hong Kong-listed Digital China, Longtop Financial Technologies, Yucheng Technologies and Hundsun Technologies.
It said the mainland banking sector's leading systems integrators - service providers that bring together the hardware and software components in projects - included IBM, Accenture, Hewlett-Packard, Digital China and Hi Sun Technology.
Knapik said other key investments for retail banks included online and mobile banking technology.
'Technology that allows smarter selling and servicing, such as customer analytics and data management, are also expected to remain hot areas in the near future,' he said.
Business analytics provider SAS, for example, has seen demand for its product grow steadily on the mainland. ICBC, the world's largest bank in terms of market capitalisation, uses SAS software to analyse large volumes of account and transaction data, as well as data from mobile payments and other new sources to make better business decisions, build stronger customer relationships and improve risk management.
SAS's worldwide revenue, in US dollars, in 2010. Demand for its business software has grown steadily on the mainland