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Research and consulting firm Gartner Inc has pegged the gobal banking and investment services IT spending at $652.1 billion in 2023, growing at 8.1 per cent over the previous year’s numbers. Spending on software will see the largest growth with an increase of 13.5 per cent in 2023.
Driven by the rising use of consulting services and ‘infrastructure as a service’ (IaaS), IT services will be the largest spending category, forecast to reach almost $270 billion in 2023. This is an increase of 9.3 per cent over 2022, reflecting the increasingly important role IT service providers play in helping banking and investment services organisations navigate emerging opportunities and challenges.
“To deal with the current economic climate, banking and investment services CIOs are now prioritising more conservative objectives that support resilient and sustainable growth, such as a better customer experience and more efficient operations,” Pete Redshaw of Gartner said.
This is a change from previous years where outright growth — new territories, new customers, new lines of business — was the primary objective of banking CEOs.
“Current economic headwinds have changed the context for technology investments in banking and investment services this year,” Debbie Buckland, Director Analyst at Gartner, said.
Rather than cutting IT budgets, organisations are spending more on the types of technologies that generate significantly higher business outcomes.
Spending on software is shifting away from building in-house, in favour of buying solutions that generate value from investments more rapidly.
Citing its CIO and Technology Executive Survey for 2023, Gartner said banking and investment services CIOs would spend the largest amount of new or additional funding in 2023 on cybersecurity, data and analytics, integration technologies, and cloud.
More than half plan to increase investments in cloud, while reducing IT spending in their own data centres.
“This is reflected by slower growth in data centre systems spending from 13.2 per cent in 2022 to 5.7 per cent in 2023. Banks are disengaging from tangible assets and capital expenditure in favour of adopting services and operating expenditure, to meet evolving customer and market expectations,” it said.
Talent shortage
With the global talent shortage impacting banking and investment services organisations, spending on internal services will increase by 4.2 per cent in 2023 to support the increased costs of hiring and retaining talent.
“Even after the recent widespread redundancies at many of the technology giants, banks are no longer seen automatically by top talent as the most desirable, rewarding or stimulating destinations,” Redshaw said.
“More innovative solutions are needed, such as dropping the requirement for university education and adding benefits such as lifetime retraining, hybrid teams, agile methods and fintech partnerships,” he said.
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