The growing threat from hackers, new regulations, reputation issues and the growing importance of direct channel self-service banking are pushing IT security to the very top of the corporate agenda for Western European financial institutions, new research has revealed.
According to the report from IDC company Financial Insights, banking and finance firms are increasingly finding that their IT security is coming under pressure from both external hackers and ever-tightening corporate regulations.
Angela Vacca, senior research analyst for European IT Opportunity: Financial Services research, said: "Financial institutions are under constant pressure because hackers' strategies evolve very rapidly and regulators constantly require stricter levels of control, which involve continuous upgrades of IT systems. Therefore, financial institutions that do not tackle security issues are expected to face huge tangible and intangible costs."
The Financial Insights study, Western Europe Financial Services Sector IT Spending for Security 2005–2009 Forecast, notes that priorities for security technology areas remain primarily within anti-virus software and firewall appliances, followed by web filtering and intrusion detection solutions. Banks are also starting to invest in two-factor authentication technology, which is a combination of hardware and software solutions coupled with one-time passwords.
According to the results of a primary research survey by Financial Insights Europe and IDC's European Vertical Markets, the preferred strategy when investing in IT security solutions for more than 50 percent of Western European financial institutions is a mix of suite and individual components.
Financial Insights Europe predicts that IT spending for security within European financial institutions will grow faster than overall IT spending because of new regulations, the strong impact security has on brand and reputation issues and the high impact security has on customers' perception.
In more detail, IT spending for security within the Western European banking sector is expected to grow at a 15.2 percent compound annual growth rate over the next five years and is therefore an attractive segment for IT vendors.
In terms of volume, IT spending for security counts for about 2 percent of the IT spending of the Western European banking industry and reached $952 million in 2004.