Gartner predicts that IT spending by banks and securities brokers will decrease by 4.7% in 2020

Despite current restrictions, new sources of revenue will be critical to recovery

Gartner, Inc., the world leader in corporate research and advice, warns that worldwide IT spending in the banking and securities brokerage sectors is expected to fall by almost 4.7% in 2020, bringing in US$ 514 billion worldwide. The investments in PCs and mobile devices will have the biggest drop (reduction of 12.1%), followed by systems for Data Centers.

“The pandemic of COVID-19 not only caused uncertainty in the banking and securities brokerage sector this year, but also a definite change in the way customers should interact with their financial institutions, ”says Jeff Casey, Analyst and Senior Director at Gartner. “These companies continue to respond to customers' emerging needs in the midst of ongoing economic closure and increasingly weak government support.”

The industry's initial response was dominated by operational actions to empower a workforce remote work, responding to the increase in credit needs, in addition to efforts to expand the use of digital channels and initiatives to reassure the most nervous investors. The customer service channels were placed under additional pressure, with banks responding quickly, adding or adjusting capacities both in self-service and in-person service channels.

During the early stages of the pandemic, banks focused spending on technology in four main areas:

- Operations: dedicated to ensuring continuity and access to basic services;
- Supply chain: to meet the emerging needs of suppliers and customers;
- Revenue: which sought to ensure the continuity of the business viability;
- Workforce: to support employees and remote work in the event of an interruption.

Gartner predicts, in this scenario, that spending on technology in the banking and financial securities sector will recover in 2021, growing 6.6% globally (see Table 1).

“With a better understanding of the impact of COVID-19, banks and brokerages are now accelerating automation initiatives, such as customer-facing chatbots, robotic process automation (RPA) and end-to-end account origination solutions” , says Casey. “They are also focused on redesigning the organization's structures and workflows and redefining priorities for modernization initiatives.”

Forecasting global IT spending in the banking and financial securities industry (in billions of dollars)

After a strong growth of 5% in 2019, the impact of COVID-19 will reduce spending on IT services in 2020. The size of contracts, terms of contracts and the type of business will be severely affected, as large projects transformation processes are being reduced or canceled.

"This scenario will be brief, as banks will have to react and respond to interruptions caused by COVID-19", says the director of Gartner. "Spending on IT services will begin to recover as banks begin to accelerate their main modernization initiatives in 2021."

Gartner believes that the ability to create value - and ultimately, new sources of revenue - will be critical to long-term success and a prolonged recovery. COVID-19 presented an opportunity for banks to increase their digital involvement and expand the services offered. Currently, banks derive 27% of revenue on average from their operations through digital services provided externally, according to the Gartner 2020 CIO Survey.