IT Spending During COVID-19 in Banking
A Seismic Shift
The initial shock and aftershocks of the pandemic will force financial institutions to rethink their long-term strategic IT spending priorities. Our outreach suggests many financial institutions are throwing out 2020 IT spending roadmaps and looking to reprioritize for a “new normal.” So much will depend on how the pandemic unfolds, whether or not we see multiple periods of shelter-in-place, and the depth of impact on consumers and the economy. However, rapid changes in major global economies will impact the current and future outlook for banking, affecting investment into strategic initiatives.
The impact of COVID-19 will put multipronged pressure on financial institutions.
- Revenue and profitability will be depressed
- Resiliency of assets will be put under pressure
- Operating models will continue to be stretched and disrupted
Demand-and supply-side shocks will have a lasting economic impact on existing technology budgets and implementation strategies. Celent predicts significant changes to IT budgets and strategic agendas for the coming 6 to 12 months.
- Acceleration of digital customer engagement preferences by previously branch-based customers
- Growth of business continuity expenses and dynamic scalability of resources in the near term
- Emphasis on cost optimization and resource efficiency as initial tactic responses evolve into more strategic spending considerations
This report attempts to establish a framework for thinking about IT spending benchmarks as the pandemic unfolds, with insights into how projections for IT growth might be affected.