Gartner: IT Spending for Banking and Investment Services Worldwide to Reach $652 Billion in 2023

IT spending for banking and investment services globally is estimated to reach $652.1 billion in 2023, an 8.1% increase from 2022, according to Gartner. Software spending will see the most significant growth, with a 13.5% increase in 2023.

“The current economic turbulence has changed the technology investment landscape in banking and investment services this year. Instead of cutting IT budgets, organizations are spending more on technologies that generate significantly higher business outcomes. Spending on software, for example, is shifting from internal development to acquiring solutions that deliver value faster,” said Debbie Buckland, Director Analyst at Gartner.

Investments in the cloud continue at a steady pace

According to the Gartner 2023 CIO and Technology Executive Survey, IT executives in banking and investment services will allocate most of the new or additional funding resources in 2023 to cybersecurity, data and analytics, integration technologies, and the cloud.

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More than half of them intend to increase investments in cloud while simultaneously reducing IT spending on their own data centers. This is reflected in the slower growth of data center systems spending, from 13.2% in 2022 to 5.7% in 2023 (see Table 1). Banks are reducing their capital assets and capital expenditures (capex) in favor of adopting services and operating expenses (opex) to respond to evolving customer and market expectations.

“To cope with the current economic climate, IT executives in banking and investment services are prioritizing more conservative goals that support resilient and sustainable growth, such as improving the customer experience (CX) and operational efficiency. This is a shift from previous years when overall growth – new territories, new customers, new lines of business – was the primary goal of banking industry CEOs,” added Pete Redshaw, VP Analyst at Gartner.

IT Services remain the largest spending category

Driven by increased use of consulting services and infrastructure as a service (IaaS), IT services will represent the largest spending category, estimated to reach nearly $270 billion in 2023. This represents a 9.3% increase from 2022, reflecting the increasingly important role IT service providers play in supporting banking and investment services organizations to navigate emerging opportunities and challenges.

“Economic uncertainty is causing organizations to break longer-term contracts into multiple shorter projects. They are also hesitant to sign new contracts, commit to long-term initiatives, or engage in new technology partnerships, leading to increased usage of IT consulting services,” Buckland emphasized.

Skills shortage leads to increased internal services spending

The global talent shortage also affects banking and investment services organizations, and internal services spending will increase by 4.2% in 2023 to support the rising costs of hiring and retaining talents.

“Even after the recent layoffs by many technology giants, banks are no longer automatically seen by top talents as the most desirable destinations, offering satisfaction or a stimulating environment. More innovative solutions are needed, such as removing university education requirements and adding benefits like continuous reskilling, hybrid teams, agile methods, and fintech partnerships,” Redshaw detailed.

Gartner clients can read more in “Forecast: Enterprise IT Spending for the Banking and Investment Services Market, Worldwide, 2021-2027, 1Q23 Update” and “2023 CIO and Technology Executive Agenda: A Banking and Investment Services Perspective.”

Additional analysis on CIO and IT trends will be presented at the Gartner IT Symposium/Xpo, the world’s most important conference for CIOs and other IT executives. Gartner analysts and participants will explore technology, perspectives, and trends shaping the future of IT and business, including ways to harness generative AI, business transformation, cybersecurity, customer experience, data analytics, executive leadership, and more. Follow conference news and updates on Twitter using #GartnerSYM.