Report: Financial Crisis Forcing Banks To Change Security Spending
A recently released report by Frost & Sullivan says the current economic meltdown has affected sales in the global market for physical security solutions in banking and financial institutions. This is the case especially in North America and Western Europe, due to branch closures and headquarters consolidation.
Banks review security spending every quarter, and it is expected that officials will put on hold large and medium-sized projects in the strenuous effort of consolidating balance sheets. However, solution providers will remain buoyant due to banks' need to protect their valuable assets from both physical and IT attacks.
According to Frost & Sullivan's latest report, global market for Electronic Physical Security in Banking and Finance earned revenues of $936 million in 2007.
"The critical need for security in banks will help in some way to sustain the spending for physical electronic security, however the growth rates in 2008 and 2009 are expected to be at least two percent less than the peak in 2007," said Matia Grossi, industry analyst for Frost & Sullivan Electronics & Security group.
Since the electronic physical security market in the banking and financial institutions sector is very mature, it is sensitive to the shrinking of the installed base of bank retail branches and financial institutions.
The huge installed support of analog security equipment also makes banks reluctant to make the transition to IP technology. At the same time Greenfield deployments, where latest technologies and systems are usually installed, are expected to be put on hold as new branches are unlikely to be opened.
"Focusing on the applications of security systems beyond traditional security applications, for example in customer relationship management, is one of the keys to succeeding in these challenging situations," Grossi said.
Greater customer awareness about the advantages and new functionalities of IP-based systems drives banks to maintain their current level of spending in electronic physical security, even in the present difficult times. Furthermore, regulatory and insurance requirements compel banks to sustain a required level of physical electronic security.
"Once the situation will be normalized, banks are expected to increase their spending once again; by 2013 the worldwide spending for electronics physical security is expected to reach 1.4 billion," Grossi said.