Financial firms to raise IT spending in 2015

The vast majority of banks and financial institutions plan to raise their IT spending this year, positioning technology as the strongest capital investment such firms are set to make in 2015.

In fact, having asked financial firms about their outlook, employers’ group the CBI and accountancy firm PwC found that a balance of 75% expect to approve more money for IT.

Only a balance of 19% plan to boost budgets for marketing; a 36% balance will do the same for land/buildings, and a similar number will fork out extra on vehicles and machinery.

Increasing efficiency, reaching new customers and providing new services were the main drivers of the bigger investments. Demand was seen as the investments’ biggest constraint.

Also according to the survey, building societies seem to be the most ‘IT-friendly’ financial firm out of the eight types quizzed between November and December 2014.   

That’s because they are the only type of financial outfit to be more likely to be both awaiting a bigger IT budget and to be increasingly likely to regard apps/systems as critical to growth.  

Specifically, the balance of building societies due to spend more on IT this year than last stands at 68%, compared to balances of 54% (in the previous quarter) and 66% (in the previous year).

And the balance of them viewing systems and applications as an important part of their growth strategy over the next year is also 68%, the highest figure for at least four quarters.

However finance houses emerged in the survey as being more supportive than building societies of software and hardware, and its potential to help their operation expand.

The contrast is banks. Although they are the top two clients for IT contractors in 2014, only a balance of 1% of banks currently put stock in apps or systems as growth enablers.

The banks’ IT budget plans also seem less stellar than expected because, even though a vast majority are in the black, the balance awaiting a bigger pot for IT has fallen (albeit only fractionally).

The other stand-out financial sector in the survey is insurance. Life insurers, for example, are planning in greater numbers than they did last year to invest “considerably more” in IT.

But just like at general insurers, who are also more likely than they were in the last four quarters to be set to spend more on IT, apps and systems are seen by life firms as less vital for growth.

Securities trading firms were the other survey respondents to hit a peak, as across the board and without exception they will invest more in technology over the next 12 months.