Focused on software and cloud investments
The worldwide banking and investment services industry is poised to witness a significant increase in IT spending, with a forecasted total of $US652.1 billion in 2023, marking an 8.1 per cent rise from the previous year, according to Gartner, Inc. Notably, the largest growth is expected in software spending, which is projected to surge by 13.5 per cent in 2023. As economic conditions shift, organizations in the sector are redirecting their technology investments towards solutions that deliver substantial business outcomes. Gartner’s findings shed light on the key areas of investment and strategic priorities within the industry.
Shift towards value-generating technologies: Gartner’s Director Analyst, Debbie Buckland, highlights that the banking and investment services sector is refraining from cutting IT budgets and instead increasing investments in technologies that offer accelerated value. This shift is particularly evident in software spending, which is moving away from in-house development towards the adoption of solutions that generate quick returns on investment. Organizations are recognizing the need to harness external expertise to drive digital transformation and operational efficiency.
Cloud investment continues to surge: Gartner’s 2023 CIO and Technology Executive Survey reveals that banking and investment services Chief Information Officers (CIOs) are prioritizing investments in cybersecurity, data and analytics, integration technologies, and cloud. Over half of the surveyed CIOs plan to increase their investments in cloud services while reducing spending on in-house data centres. The shift towards cloud adoption is evident in the projected growth rate of data centre systems spending, which is anticipated to decrease from 13.2 per cent in 2022 to 5.7 per cent in 2023. Banking institutions are recognizing the benefits of cloud services in meeting evolving customer expectations and staying agile in a rapidly changing market.
Focus on resilience and efficiency: Pete Redshaw, VP Analyst at Gartner, notes a shift in objectives for banking and investment services CIOs. Resilient and sustainable growth, as well as improved customer experiences and operational efficiency, are now key priorities. This represents a departure from the previous focus on rapid growth and expansion. The industry is adapting to the current economic climate by investing in more conservative objectives that align with long-term success.
IT services and internal services spending: IT services, driven by consulting services and infrastructure as a service (IaaS), will dominate IT spending in the banking and investment services sector. Gartner forecasts IT services spending to reach almost $US270 billion in 2023, reflecting a 9.3 per cent increase from 2022. Additionally, there will be a 4.2 per cent increase in spending on internal services to support the rising costs of talent acquisition and retention. The talent shortage within the industry is prompting organizations to invest in internal resources to attract and retain top talent.
Navigating uncertainty with innovative solutions: The global talent shortage is leading to a re-evaluation of banking institutions as the preferred career destinations for top talent. To address this challenge, organizations are exploring innovative solutions such as dropping the requirement for university education, offering lifetime retraining, implementing hybrid teams, adopting agile methodologies, and forming partnerships with fintech companies. These measures aim to attract skilled professionals and ensure ongoing competitiveness in the market.
The banking and investment services industry is witnessing a significant rise in IT spending, with a particular focus on software and cloud investments. By prioritizing value-generating technologies, enhancing customer experiences, improving operational efficiency, and addressing talent shortages, organizations are positioning themselves for resilient and sustainable growth. As the industry evolves, strategic investments in IT services and internal services will play a crucial role in helping businesses navigate emerging opportunities and challenges.