Retail banks will increase their IT spending by 3.4% to $118.6bn in 2013, according to a report from analysts Ovum.

Ovum’s Business Trends: European Retail Banking Technology Investment Strategies 2013 report said IT growth for European banks will lag behind North America and Asia-Pacific, with just 1.8% growth expected, compared to 3.3% and 5.1%, respectively.

Ovum said the shift towards greater IT spending in Europe signalled a reduction in cost-cutting measures previously seen in the global banking industry.

The report predicted spending on mobile channels would grow by 4% in Europe in 2013 and rise at an annual growth rate of 6% until 2017.

Spending on online channels in Europe is predicted to grow by 4.2% in 2013.

Ovum said that credit risk management and data privacy would become key regulatory compliance drivers of IT spending in 2013.

Global investment in management information systems is predicted to reach $6.4bn, $2.2bn of which will be in Europe.

Jaroslaw Knapik, senior analyst for financial services technology at Ovum, said the "optimistic signs on the economic horizon" were driving the shift away from cost-cutting and towards investment strategies.

He added: "Regulatory compliance was by no means the sole driver of investment.

"The level of investment in digital channels gives a clear indication that banks are fully aware of the growing expectations of their customers, as well as the opportunities they present."


Related stories:

Core banking transformation strategy

IT spending growth set to accelerate

IT spending to return to normal in 2012