They really don’t have a choice here. And yet, in this “everything is customizable and personalize-able” world in which we now live, we have grown to expect that there is always an infinite spectrum of choices available. Not so much when it comes to banks’ spending on technical infrastructure. It turns out that internally-developed software costs (which we believe includes both proprietary and consultant-developed software) are the fastest growing component of our technology total cost of ownership (TCO) framework, which includes hardware, software, data and human capital. Of the 50+ large global banks that we have modeled so far, most of them throw off a similar picture as the one in the sample exhibit below of a large APAC bank. Here the accumulated net carry value of software is being driven almost exclusively by spending on internally-generated software – and far outstripping the growth in spending on computer hardware / equipment. Furthermore, it doesn’t matter if the bank is in the Americas, Europe, Asia or anywhere in between. Most of [...]
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