After a few “tumultuous” years following the banking crisis, IT spending in the financial services industry is set to rise, according to new research from Ovum. The firm says there is a consensus across the capital markets, corporate banking and asset management that technology spending will grow between now and 2018, with overall financial markets spending exceeding $100 billion in 2018.
The increase is mainly attributed to investments in IT that drive cost-savings within the business, Ovum says. After a weak 3.7 percent increase in IT spending in 2013, this year will see an increase across the sector, with 4.8 percent global growth, the firm says.
“Banks are currently in the process of renewing their platforms and are investing in IT for the future,” Daniel Mayo, practice leader, financial services technology at Ovum, said in a statement. “This investment will be mostly focused on the front office in order to improve order management systems. But we will also see a continuation of significant investment in the back office to improve automation and scalability levels.”
With financial institutions wanting to move toward a central banking function, they will be consolidating and improving their systems in order to make them more efficient, Ovum says. Currently, the capital markets, like banks, are looking to transform their trading platforms. IT spending will pick up over the long term, with overall IT spend growing at a 6.4 percent compound annual growth rate between 2014 and 2018.