Celent estimates that global information technology spending by financial services institutions will reach US$353.3 billion in 2009, representing a decline of 1.3% over 2008 (when IT spending totaled US$358 billion). This figure is substantially lower than the 4.5% growth achieved in 2008 and 6.4% growth in 2007. Although the next couple of years will be challenging, Celent expects global spending on IT products and services to grow to US$364.5 billion by 2010, a mere 0.9% CAGR from 2008 to 2010, according to a new report entitled, IT Spending in Financial Services: A Global Perspective, from Celent, a Boston-based financial research and consulting firm.
Key findings of the report note that European and North American financial institutions currently spend an almost equal amount on IT. Firms in Europe and North America account for 37.7% and 33.5%, respectively, of the global IT investments by financial services institutions. Firms in Asia-Pacific account for 23.3%, and Latin America and Africa account for the remaining 5.6%. The report also says that among all regions, the fastest growth will be seen in financial services institutions in Asia-Pacific, with IT spending increasing at 8.9% in 2008 and a CAGR of 4.1% from 2008 to 2010. Growth will continue to rise in this region, and total spending in Asia-Pacific is expected to reach US$90.3 billion in 2010. Latin America and Africa are expected to grow at a relatively modest rate (3.1%).
Among the industry verticals, IT spending on banking activities accounts for the largest portion of the total IT spending, nearly 50%, and is estimated to reach US$160.4 billion in 2008. European banks make up the lion's share of bank IT spending at US$61.6 billion. IT spending on insurance and securities and investments activities is expected to reach US$103 billion and US$74.7 billion, respectively. In the medium term, insurance firms are expected to increase their spending in IT at a faster rate than the other industry verticals, according to the report.