- ClicktoTweet: Retail Banks to Spend $16.6B on Digital Transformation Initiatives in 2015, According to IDC Financial Insights #DX #IDC #FinancialInsights
Key highlights of the new report include:
- The highest growth in digital transformation spending comes from software and internal IT. While internal IT is typically a large part of digital transformation for only the largest banks that can afford to have substantial IT groups, software spend is shared by all institutions, whether a bank in the top 10 in assets that develops its own bespoke software, or a small mutual that relies on an integrated bank software provider for its technology needs.
- Spending on IT services for digital transformation is a smaller, but not inconsequential, source of spend growth as well, growing at 8.5% 2015 to 2016. Only hardware is keeping pace with total IT spending growth.
- The growth of spending on digital transformation is outpacing aggregate IT spending by over 2.5 to 1. In 5 years, IDC Financial Insights estimates that fully one third of the IT budget at U.S. banks will be dedicated to achieving digital transformation.
- Spending on consumer initiatives (including small business) and infrastructure improvements will continue to lead the way. Payments is experience a healthy proportion of spend in transformation as well, however, given the range of payment types in that category – ACH vs stored value, for example – a more detailed analysis is needed to reveal the strong areas of growth in payments transformation.
"It's like two teams of diggers making their way through a mountain to build a tunnel. They're hoping they'll be aligned when they meet in the middle. It's a $16.6B bet," said Jerry Silva, Global Banking Research Director for IDC Financial Insights.
The budget season is about to begin for banking institutions in the U.S. And the challenge of funding digital transformation is a difficult one. This report provides market insight into what kinds of investments that market is making to enable digital transformation, where those investments are being made, and how those investments will grow over time. Banks can use this report to guide their own investment strategy in line with their commitment to transform their business.
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