The global IT spending by banking and investment services is projected to reach a total of $652.1 billion in 2023, marking an 8.1% increase from 2022, said a report. Software expenditure is anticipated to witness the highest growth, with an increase of 13.5% in 2023.
Despite prevailing economic challenges, technological investments in banking and investment services have been adjusted rather than reduced, said a report from Gartner. Debbie Buckland, Director Analyst, Gartner said that the spending focus is shifting towards technologies that can quickly yield significant business outcomes, with software purchases taking precedence over in-house development.
Results from the Gartner 2023 CIO and Technology Executive Survey indicate that the largest proportions of new or additional funding in banking and investment services will be allocated towards cybersecurity, data and analytics, integration technologies, and cloud in 2023. A majority of banking and investment services plan to expand investments in cloud technology, while simultaneously reducing spending on in-house data centers.
Banks are gradually moving away from tangible assets and capital expenditures (capex) to adopt services and operating expenditure (opex) to keep up with evolving customer and market expectations. Gartner VP Analyst Pete Redshaw said that this shift is due to a more conservative approach prioritising resilient and sustainable growth, such as better customer experience and efficient operations.
IT services are predicted to be the largest spending category, with an estimated reach of nearly $270 billion in 2023, an increase of 9.3% from 2022. This reflects the critical role that IT service providers play in assisting banking and investment services organisations to address emerging opportunities and challenges, said Gartner.
The shortage of talent worldwide is leading to an increase in spending on internal services in the banking and investment services sector, with a projected increase of 4.2% in 2023. Innovative solutions such as removing the university education requirement, offering benefits like lifetime retraining, hybrid teams, agile methods, and fintech partnerships are suggested to attract and retain 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,” said Redshaw. “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.”