U.S. retail banks to spend $20.2 billion to support digital transformation initiatives in 2017, according to IDC Financial Insights
Jun 27, 2017
New market forecast finds largest institutions allocate more than 40% of IT budget to digital transformation
FRAMINGHAM, Mass., June 27, 2017 – I DC Financial Insights today announced the availability of a new IDC Market Forecast report to provide end users with an updated look at digital transformation (DX) spending in U.S. banking. According to the new study, U.S. Banking Digital Transformation Spending Forecast, 2017-2020 (Doc #US42429417), retail banks (including thrift banks and credit unions) in the United States will spend $20.2 billion on hardware, software, services, and internal IT staff to develop and implement DX initiatives in 2017, growing at an average compound annual growth rate (CAGR) of 22.5% into 2020. This compares with growth of 4.8% in overall IT spend for U.S. banks. The forecast highlights spending by US–based banks across four categories of DX technology: hardware, software, IT services, and internal IT, as defined in IDC Financial Insights Worldwide Banking Taxonomy, 2017 (IDC #US42517617).
According to Jerry Silva, research director, Global Retail Banking, IDC Financial Insights,
"There are very few banks in the United States that aren't investing in transformational technologies, and fewer still that haven't at least developed a digital transformation strategy. And the largest institutions are allocating more than 40% of their IT budgets to digital transformation."
As banks in the United States endeavor to stay relevant in the financial lives of their consumer, business, and corporate customers, the institutions are dedicating more and more of their scarce resources to initiatives that promise to transform the business. In addition:
- 25.7% of the banks' IT budget will be spent on DX initiatives in 2017, growing to over 40% by 2020
- 82% of the DX spend is taking place in the middle and back office and in commercial and payments areas where investments in infrastructure, security, risk management, and data initiatives are higher than in front-office, customer-facing spending
- Because of the pressures coming from regulatory compliance, increased need to manage risk, and constant attacks on the banks' security systems, discretionary spending for important line-of-business projects that can accomplish DX continues to be at a premium
IDC defines DX as the continuous process by which enterprises adapt to or drive disruptive changes in their customers and markets (external ecosystem) by leveraging digital competencies to innovate new business models, products, and services that seamlessly blend digital, physical, business, and customer experiences while improving operational efficiencies and organizational performance.
Stay up to date with the latest industry developments: sign up to receive TelecomTV's top news and videos plus exclusive subscriber-only content direct to your inbox – including our daily news briefing and weekly wrap.