Banking and Investment Services IT Spending Expected to Reach $652.1 Billion in 2023

Global banking and investment services IT spending is projected to grow by 8.1% in 2023, reaching a total of $652.1 billion, according to Gartner, Inc. The largest growth is expected in software spending, with a significant increase of 13.5% anticipated for the same year.

Debbie Buckland, Director Analyst at Gartner, highlighted the impact of current economic conditions on technology investments in the banking and investment services sector, stating, “Rather than cutting IT budgets, organizations are spending more on technologies that generate higher business outcomes. We see a shift away from in-house software development toward purchasing solutions that provide rapid value from investments.”

The Gartner 2023 CIO and Technology Executive Survey revealed that cybersecurity, data and analytics, integration technologies, and cloud solutions are the areas where banking and investment services CIOs plan to allocate the largest amount of new or additional funding in 2023. Over 50% of organizations are looking to increase their investments in cloud services while reducing spending on their own data centers. This trend is reflected in the slower growth rate of data center systems spending, projected to be 5.7% in 2023 compared to 13.2% in 2022. Banks are embracing services and operating expenditure models to meet the evolving expectations of customers and the market.

Pete Redshaw, VP Analyst at Gartner, emphasized that banking and investment services CIOs are now prioritizing objectives that support resilient and sustainable growth in response to the current economic climate. This shift includes a focus on improving customer experience and operational efficiency, moving away from the previous emphasis on outright growth.

IT services, driven by increased usage of consulting services and infrastructure as a service (IaaS), will be the largest spending category, expected to reach approximately $270 billion in 2023. This represents a 9.3% increase over 2022 and highlights the crucial role IT service providers play in helping banking and investment services organizations navigate emerging opportunities and challenges.

The talent shortage in the industry is also impacting spending. In response to the rising costs of hiring and retaining talent, spending on internal services is projected to rise by 4.2% in 2023.

Pete Redshaw commented on the need for innovative solutions to address the talent shortage, stating, “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.”

As the banking and investment services sector continues to evolve, organizations are recognizing the importance of strategic technology investments. By prioritizing software and cloud solutions, businesses can position themselves at the forefront of innovation, driving growth, enhancing customer experience, and staying competitive in a dynamic market environment.

Gartner’s forecast highlights the increasing significance of technology in shaping the future of banking and investment services, urging organizations to adapt and invest strategically to capitalize on emerging opportunities and deliver sustainable outcomes.