IT spending will grow at the expense of other areas, such as marketing, as optimism in financial services increases and businesses try to sell more to existing customers, while also aiming for improved efficiency.
Confidence is growing in financial services, with 59% of firms in the sector more optimistic than three months ago, according to research from PwC and the Confederation of British Industry (CBI). Some 31% reported increased business volumes, while 37% of firms expect business volumes to rise over the next three months.
But firms in the sector are not getting carried away and, according to the research, are focusing on becoming more efficient, as well as retaining and selling more to existing customers rather than chasing new customers.
To achieve this, companies need to increase spending on IT and lower it in other areas, such as marketing.
“Financial services firms expect to reduce investment in land and buildings, vehicles, plant and machinery, and marketing over the next 12 months. However, firms in most sectors continue to plan strong increases in IT spending,” said the report.
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In fact, while marketing spend actually fell by 10%, IT investment is expected to increase by 72% over the next 12 months.
CBI director of economics Rain Newton-Smith said: “Firms plan to cut their marketing spend and increase their IT investment over the next year, as they focus on increasing efficiency and selling to existing customers, rather than trying to win new business."
More specifically, banks will have to invest in wider areas of IT, according to the research.
PwC UK financial services leader Kevin Burrowes said banks' spending priorities for the next year focus on improving IT infrastructure and cyber security.
“Growth is seen to come from cross-selling to existing customers and attracting new domestic customers," he said. "Banks are also building new digital platforms to remain competitive and respond to changing customer needs.”
Recent research from Celent revealed that European banks will spend £46bn on IT in 2017, with a large proportion of this sum being invested in new technology as the industry is transformed by competition.
In 2014, European banks spent £40.79bn on IT, but will spend £42.23bn in 2015, rising to £46bn in 2017, according to the research. Retail banks are the biggest spenders, with £18.5bn expected to be spent on IT in 2017.