Financial Services IT Spending Will Reach $500 Billion in 2021

Worldwide spending on information technology (IT) by financial services firms will be nearly $500 billion in 2021, growing from $440 billion in 2018, according to IDC.

Worldwide banking IT spend makes up more than half of the total financial services IT spend with the Asia/Pacific, Latin America, and the United States regions exhibiting above average growth, led primarily by strong software spend across all regions. Third-party spending on hardware, software, and IT services will be approximately 70% of the total IT spend, while the remaining 30% is reserved for internal IT spend for institution-employed IT staff for internal development, maintenance, and integration.

Worldwide financial services risk IT spending is predicted to grow from $80 billion in 2018 to $94 billion in 2021, fueled by technology investment to support increased requirements for fraud, security, and compliance solutions. This represents almost 20% of total worldwide financial services IT spending. The Worldwide Financial Services IT Spending Guides also include key IDC 3rd Platform and Innovation Accelerator forecasts to reflect the significance of Digital Transformation (DX) in current and planned IT investments.

"The healthy IT spend in the worldwide financial services market is primarily attributed to investment in three key aspects - improving the customer experience; shoring up and responding to the myriad fraud, security, and compliance needs; and modernizing the legacy core systems, including payments, core processing, lending, claims, policy administration, and trading," said Karen Massey, research manager, IDC Financial Insights. "We are seeing an uptick in transformational IT projects and investment in DX enabling solutions that is changing how financial institutions approach and leverage IT.