Retail banks are set to see a growth in IT spending of 3.4% worldwide, as economic optimism shifts priorities away from cost-cutting measures and towards revenue growth this year.

According to a report from analysts Ovum, retail banks are set to invest a total of $118.6 billion (£75.3 billion) during 2013, up 3.4% from 2012.

It claimed the growth follows the increased CIO focus on customer satisfaction and revenue growth.

However the figure for the UK retail banking sector is lower than the global average, expected to increase by 1.8%.

North America is expected to see 3.3% growth, while Asia will witness the largest increase in investment, at 5.1%.

The expected growth in spending indicates that widespread cost cutting measures are slowing down on a global level.

The report also indicates that there is likely to be more of a focus on investment in digital technologies, such as in mobile and online banking. This will mean more banks moving their bricks and mortar operations online.

According to Jaroslaw Knapik, Ovum senior analyst, financial services technology, European retail banks are trailing behind other regions due to macroeconomic conditions and weaker demand, causing slower investment growth.

As in other regions the immediate drivers for growth are currently investment in front-end systems, such as online banking, as well as meeting regulatory requirements, such as guidelines around Basel III, Knapik said.

In general European retail banks are currently in “waiting mode” as they emerge from a period of cost-cutting, which has already happened in the US for example.

However, Knapik said that once European economic conditions become steadier, a backlog of projects such as core banking systems refreshes are likely to take place, creating a swift uptick in the level of investment in the region.