Costs for IT of banks and financial organizations (world market)

2019: Growth of IT expenses in the financial sector for 4.9% to $539.12 billion

World IT expenses in the financial sector at the end of 2019 reached $539.12 billion, having increased by 4.9% concerning the 2018th, counted in the research agency Gartner.

Such assessment was sounded in August, 2020. Several months before experts gave other preliminary data: $607.4 billion IT expenses in financial market and their growth by 5.3%.

Main articles IT raskhdov in the financial sector, data of Gartner

Most of all costs of banks and the companies working with securities in 2019 were the share of third-party IT services — $204.54 billion that for 5% exceeds an indicator of year prescription. $92.04 billion were spent for development of internal technology services, it is 2.1% more than result of 2018.

The second in value item of expenditure in the field of IT was the software of a corporate class which sales in 2019 exceeded $100.82 billion and increased by 11.8% in comparison with previous year.

Participants of the financial industry in 2019 purchased personal computers and mobile devices for the amount of $33.22 billion that is 5.9% more, than the previous year. Expenditure for systems for data centers rose by 1% and reached $31.22 billion.

IT budgets in the financial sector in 2019 rose, but in the 2020th same it is not necessary to wait for the loudspeaker. The reason — a coronavirus pandemic.

In this COVID-19 resulted not only in uncertainty in banking sector and the industry of securities, but also to certain changes in how clients should interact with financial institutions, - the senior analyst of Gartner Jeff Casey says. - These companies continue to react to the arising customer needs in the conditions of the continuing closing of economies and reduction of the state support.

World IT expenses in the financial sector grew by 5%

According to Kasey, having realized serious influence of a pandemic of a coronavirus, banks and the companies which are engaged in securities began to implement quicker projects of automation, applying, in particular, chat-bots, complete solutions to opening of accounts and the system of robotic process automation (RPA). Also these companies focused on change of structure of the organization, workflows and priorities in the field of technology upgrade, the expert added.

According to analysts of Gartner, capability of participants of the financial industry will begin to create new sources of income crucial for long-term success in conditions of long recovery. COVID-19 gave to banks an opportunity to expand the digital interaction and to expand the offered services. According to the research Gartner, about 27% of revenue of banks are the share of digital services.

In a research it is also noted that after the outbreak of a coronavirus financial institutions began to transfer the personnel to remote work, to train employees in digital skills and to calm investors. At early stages of a pandemic banks concentrated the IT expenses on four osnvny areas:

• Transactions: for providing continuous access to the main services;
• Supply chain: for satisfaction of the arising needs of suppliers and consumers;
• Revenue: for ensuring continuous viability of business;
• Personnel: for support of employees and transition to remote work in the conditions of violation of work of financial and other companies.

According to experts, the number of banks in the world decreases, however the competition between them becomes more tough, but also, banks begin to compete with other financial companies. At the same time regulatory load of all industry grows. All this stimulates changes in structure of IT expenses.

Many banks which increase IT budgets aim at transformation into the financial technical-companies with the banking license. They joined in competitive struggle on a technology basis including to reduce time of removal of products for the market (time to market), to demassifitsirovat offers to clients, to accelerate business work, and as a result increase investments into IT, actively experiment with perspective financial technical-startups.

On the other hand, less large credit institutions deprived of guardianship of the state and access to cheap resources. They are forced to save and optimize IT budgets, financing first of all support in working order of IT infrastructure, fulfillment of requirements of regulators and point start of new projects with deadlines and fast return, as a rule, for the purpose of cost optimization and increase in profitability.

World IT expenses in the financial sector at the end of 2019 reached $539.12 billion, having increased by 4.9% concerning the 2018th

According to analysts, the pandemic of a coronavirus forced financial institutions to save, however such situation will last not for long. Moreover, as expected, expenses on IT services will quicker grow former as banks aim to accelerate project implementation of digital transformation.

Banks and the companies working with securities actively invest in new technologies,  such as artificial intelligence and blockchain to release new products and to react to the growing customer needs.

It agrees to survey of Gartner conducted in 2019, 27% of Chief information officers in financial companies consider artificial intelligence and machine learning the main technologies which need to be developed. On the second place there were instruments of data analysis and predictive analytics (20%). Also respondents noted the increasing importance of biometric solutions.^[1]

See Also

• Overview: IT in banks 2019
• Trends of bank informatization
• The Russian market of bank informatization in 2017 - 2018
• IT innovations of the Russian banking sector
• Regulatory "sandbox" of the Bank of Russia
• Information technologies in Sberbank
• Big Data of Sberbank grows at mad rates. How this supermassive is stored and used?
• Information technologies in VTB Group
• Blockchain in Russia
• Perspectives a blockchain in the Russian banking sector
• Information security in banks
• Cyber security in the Russian banks: research of VMware and TAdviser
• National Biometric Platform (NBP)
• Single Biometric System (SBS) of these clients of banks
• Biometric identification (market of Russia)
• Digital transformation of the Russian banks
• The policy of the Central Bank in the field of data protection (cyber security)
• Losses of banks from cyber crime

Notes