IT spending in the Australian banking and investment services space is predicted to reach $27.3 billion by the end of 2023.
This is according to research firm Gartner, which forecast this would be a 7.6 per cent increase on 2022.
Of this year’s pie, IT services are expected to make up the largest slice, rising by 5.8 per cent to $12.4 billion. Meanwhile software spending is predicted to see the largest growth out of all spending categories, at 14 per cent to $6.7 billion.
Nicholle Lindner, VP and managing executive partner at Gartner, said IT spending from Australian banks is moving away from the more traditional areas of regulatory compliance change and legacy infrastructure support and towards mortgage customers.
“Strategic investments in new platforms, partnering with fintechs and other digital innovators, as well as legacy modernisation, will become increasingly essential for banks this year as they compete to win market share from each other in this challenging market, particularly from a home loan perspective,” she said.
Jeff Casey, senior director analyst at Gartner, added that Australian banks are looking at digital platforms to drive efficiency, in addition to digital channels and customer engagement technology, to “deepen relationships and assist customers through challenging economic times”.
“Given the growing prevalence of fraud and scams in the market, investments in data and analytic capabilities like AI [artificial intelligence] and machine learning, real-time monitoring and alerts are particularly relevant to help protect customers and avoid losses,” he added.
By comparison, global banking and investment services IT spending is forecast to reach US$652.1 billion, up 8.2 per cent from 2022’s figures. Services are also expected to make up the largest spend in the sector, at US$269.7 billion, while software is predicted to see the largest growth out of all spending categories, rising 13.5 per cent to US$174 billion.
One area of focus for banks' IT spend could potentially be anti-scam measures, as banks were recommended to work closer with telecommunication providers by the Australian Securities and Investments Commission (ASIC) in April in order to prevent scams as Australians reported over $550 million in losses at the time.
ASIC claimed that 31,700 bank customers were hit by fraudulent activity in the last financial year despite financial institutions investing “significantly in their anti-scam" practices.