Despite the credit crisis hitting IT budgets at banks across Europe, "carefully targeted" investment in technology will continue in 2009, according to a new report by Datamonitor.

"The European Retail Banking Technology" report uses research conducted between October 2008 and January 2009.

It examines the biggest business challenges, IT budget outlooks and technology investment priorities of 108 financial institutions.

The study found that the continued impact of the credit crunch has made cost reductions and increased efficiency the top priorities for banks' IT spending in 2009.

Many institutions plan to use "targeted investment" in order to reach these goals, with the development of online channels seen as a "high priority" because the technology cuts the overall cost of customer service.

Banks are also increasing their IT investment across their branch networks, as the sector looks to drive revenues through streamlined services and "sales-through-service" plans.

Another area set for growth is mobile banking, with the majority of institutions either already offering the service or planning to introduce it within the next three years.

In a recent poll by the American Institute of Certified Public Accountants, information security was identified as the top issue facing corporate IT.