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Finextra

The UK Government’s £50 billion banking recapitalisation programme will split the industry in two, with important implications for technology spending, offshoring and non-banking competition, according to an analysis by TowerGroup.

The injection of UK taxpayer’s money into the ailing banking industry will create a two-tier system, according to TowerGroup, with recapitalised banks forced to adopt a low-risk business model. Those banks that have not accepted funding have a short-term market advantage with their higher tolerance to risk, says the analyst house, but economic and competitive uncertainties are likely to limit the strategic advantage that this implies.

TowerGroup suggests that the Government bail-out plan will have an immediate impact on technology spending across the sector, as bank’s freeze their strategi spending on IT until mid-2009.

Exciting times are ahead, there will be those business as usual projects, consolidation/operating system upgrades or hardware refresh projects as well as those integration large scale projects where I’m bringing another organizations IT in line with our own IT standards, to our own systems. I think we’ll see a shift towards ‘safer projects’, those that we know are going to provide business benefits or those that quite frankly we have to implement, the operating system upgrades to be in vendor support, the hardware refresh scenarios where replacing the kit is going to allow me to be more efficient with the data center space or reduce our power consumption and improve performance. Will we see a reduction in spending?

Interestingly I wonder if we wont see a move from box selling to consultancy/service providing scenarios, short/medium term projects – I need a team of guys to upgrade to Windows 2008 and integrate these systems to the bank build, or the I need to consolidate my data center and refresh the hardware, can you do this and manage it? We’ll see it’s going depend on your hardware lifecycle, how affected your business has been from the market activities, in the meantime life goes on.

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