Whether or whether not you believe tariffs to be ‘the most beautiful word in the dictionary’, usage of the word has certainly increased in frequency in recent months, thanks to the change in (and subsequent changes to) US tariff policies from the start of April. While there has been much written on this resurgent subject itself, which this blog won’t go into, from a parochial perspective such significant developments challenge any forecast constructed around the prior environment.
Right at the end of Q1, Celent published its 2025-2030 retail banking technology spend projections. Perhaps unsurprisingly, a recurring question since the new tariff policies has been whether these still reflect this new economic landscape. In response, Celent has updated these spending forecasts. Having gone through the update exercise, this blog highlights some key findings around the expected impact of the tariffs, and approach taken to adjusting such forecasts during such uncertain times.
Retail bank IT budgets started 2025 strongly with global spend expected to reach $289 billion
To frame the analysis of the tariffs impact, some initial context on the economic and technology spending environment at the start of the year. While 2025 had started with continued political uncertainty (indeed tariffs had been advocated by Trump during his presidential campaign) the economic outlook was comparatively healthy (at least for recent times). Inflation in many markets had been moving towards target levels, interest rates were generally moving downwards again from recent peaks, and GDP outlook was stable. In January, the IMF’s World Economic Outlook expected real GDP in advanced economies to expand at 1.9% (led by the US at 2.7%) with emerging market and developing economics expected to expand at 4.2%. Growth was expected to continue at the stronger rate seen in the second half of 2024.
We have a good perspective on what this outlook meant for bank IT spending from Celent’s 2025 Dimensions primary insight program, which surveyed over 250 retail banks globally over December 2024 and January 2025. While of course there was variation by bank tier and geography, average technology budget growth globally at the start of 2025 had been set at 5.8% (compared to 5.0% for 2024) with even stronger expectations for 2026 – when growth was expected to be 6.4%. Within this, North American banks were expecting the strongest growth. Averages in this region were 6.3% for 2025, with 7.0% for 2026.
Celent Dimensions 2025 Survey
Translating this into actual US$ spend values, retail banking IT spending in 2024 reached $273 billion globally, with spending expected to hit $289 billion in 2025 (5.7% growth) and $307 billion in 2026 (6.3% growth). North American retail banks were expected to be key growth contributors here, with their spend increasing from $90.1 billion in 2024 to $102.3 billion in 2026.
Revising spending projections based on the new economic outlook
Assessing the impact of tariffs is a challenging from a forecasting perspective. This is largely a reflection of fact that the extent of final resting tariffs is unknown at this stage, as negotiations between countries around tariffs continue, amplified by the seemingly unpredictable nature of policy decisions, which means major tariffs can be announced, but also then be reversed or qualified, very quickly. However, while the tariff implementation end-state is not known, what is known is that the tariffs announcements and current implementation have had a real economic impact. Supply chains have been disrupted for several industry sectors (including technology infrastructure), uncertainty has significantly reduced business investment and confidence, and stock prices have been highly volatile. For retail banking, certainly in the US, the effects have importantly passed over to the consumer side, with a significant fall in consumer confidence driven by concerns over inflation, employment prospects, and future income.
Given we know there is a real impact, but also that there is continued high uncertainty, we have considered two key factors. Firstly, what impact will the changed economic outlook have on banking income, profitability, and thus bank spending? Secondly, what response are banks themselves saying they are making to the changes?
Celent’s forecasting model is predicated on a combination of primary insight and an econometric model of future banking income and operating expenses. Technology budgets do not occur in isolation, and with bank IT intensity (IT spend as proportion of non-interest expenses) a notable proportion of the cost base (around 18-20%), banks will be forced to adjust technology budgets to some degree as bank react to lower operating income growth conditions.
To assess this impact, Celent has re-run its forecast model based on revised IMF World Economic Outlook forecast figures from end April 2025, where expected GDP figures have been revised downwards significantly. Real US GDP is now expected to expand only 1.8% (compared to 2.7%) with emerging and developing economies expanding at 3.7% rather than 4.4%. While it should be noted that IMF forecasts do come under criticism from some commentators, and the IMF itself may likely update its forecasts as the situation further evolves, we have taken its revised projections as proxy for the economic impact here.
Regarding bank direct responses to the tariffs, we have not yet conducted new large-scale primary research since Celent’s earlier 2025 Dimensions program, however, anecdotal feedback from several banks suggests that that tariffs changes have not yet resulted in major changes to technology spending or project delivery timescales. A cross-section sample, particularly from larger banks, suggests that banks currently believe that they can manage the potential inflationary impact on tariffs on technology infrastructure (given investment is often agreed with suppliers in advance along with tighter hardware estate management). While we are hearing of a weaker environment for signing new deals from some vendors, we haven’t yet seen notable deferral or cancelation of current projects.
Similarly, it should be noted that as found in from Celent’s Dimensions study, that only around 15% of bank spending is directed towards revenue growth orientated projects, with 33% allocated to efficiency- or mandatory-driven projects (which would still make sense or be required to continue). With the rest of spending allocated to run-the-bank costs, the ability of banks to significantly reduce actual spend in the short term is not that high. However, based on observed responses to other economic shocks, Celent does expect banks to make some changes to spending over 2025 even though we are not yet seeing dramatic shifts.
Tariffs expected to reduce 2025 global retail banking technology spending by $3.4 billion
Based on the IMF’s revised economic outlook, Celent now expects 2025 global retail banking technology spending to reach $285 billion. This represents growth in IT spending of 4.5%, rather than the 5.7%. This is a reduction of $3.4 billion against initial 2025 budgets, a significant amount – although note this is just 1.2% of overall spending with spend growth still positive. Regionally, strongest impacts will be felt in North American and Asia Pacific spending, with spend $1.1bn and $1.6bn lower respectively.
Celent expects the impact to continue into 2026, with global growth now at 5.6% instead of 6.3%. The reduction in spend against that expected for 2026 will be $5.5bn lower, with this undershoot broadly continuing over 2026-2030 despite some small catch-up over 2028-2030.
Celent Dimensions IT Spending Forecast (Q1 2025 & Q2 2025)
Underlying drivers for technology investment remain strong
As shown, the impact of tariffs on IT spending is notable. However, while a weaker income environment will have an impact on spending, tariffs haven’t changed the fundamental drivers that is propelling IT spending growth in banking. Celent’s Dimensions program found that the top drivers for IT strategy in 2025 were IT security and operational resilience, proposition innovation and enhancement, and the need for speed and agility, resulting in spend growth being directed towards digital channels, fraud, and risk. While tariffs might impact the headroom for product innovation, the shift to digital, the requirement for resilience, and need to manage risk and fraud remain pressing. Technology will remain central to retail banking propositions in 2025 despite the budget squeeze.
