Global banking and investment services IT spending is expected to reach $652.1 billion by 2023, up 8.1 percent from 2022, according to technology research and advisory firm Gartner. Software spending will see the greatest growth, growing 13.5% in 2023.
“Current economic headwinds have changed the environment for technology investments in banking and investment services this year,” said Debbie Buckland, principal analyst at Gartner. Investing more in the types of technologies that deliver outcomes. For example, software spending is shifting from building in-house to buying solutions that yield value from investments more quickly.”
Investment in cloud computing continues unabated
According to Gartner’s 2023 CIO and Technology Executive Survey, banking and investment services CIOs will spend the most new or additional dollars in 2023 on cybersecurity, data and analytics, integrated technology, and cloud.
More than half of enterprises plan to increase cloud investments while reducing IT spending in their own data centers. This is reflected in slower growth in data center systems spending, from 13.2% in 2022 to 5.7% in 2023. Banks are moving away from physical assets and capital expenditures (capex) towards services and operating expenditures (opex) to meet changing customer needs and market expectations.
“In response to the current economic environment, banking and investment services CIOs are now prioritizing more conservative goals to support resilient and sustainable growth, such as Better customer experience (CX) and more efficient operations.” . “This is different from previous years, when the main goal of banking CEOs was growth across the board – new territories, new customers, new lines of business.”
IT services remain the largest area of spending
IT services will be the largest category of spending, expected to reach nearly $270 billion by 2023, driven by increased use of consulting services and infrastructure-as-a-service (IaaS). This is a 9.3% increase over 2022, reflecting the growing role of IT service providers in helping banking and investment services organizations address emerging opportunities and challenges.
“Economic uncertainty is causing organizations to break down long-term contracts into multiple shorter projects,” Buckland said. “They are also reluctant to sign new contracts, commit to long-term initiatives or accept new technology partners, which is driving the increased use of IT consulting services.”
Talent shortage drives spending on internal services
Spending on internal services will increase by 4.2% in 2023 to support higher recruitment and retention costs as a global talent shortage affects banks and investment services firms.
“Even with the recent widespread layoffs by many of the tech giants, banks are no longer automatically seen as the most desirable, rewarding or stimulating destinations for top talent,” Redshaw said.
“More innovative solutions are needed, such as dropping the requirement for university education and adding benefits such as lifelong retraining, hybrid teams, agile methodologies and fintech partnerships.” – trade arab news agency