Survival Strategy

Banks Are Ramping Up Digitalization Project Spending

Article Change Management, Strategy, Financial Services 1 April 2018

PM Network

How to cite this article:

Survival Strategy: Banks Are Ramping Up Digitalization Project Spending (2018). PM Network, 32(4), 12.
 

As revenue growth slows and digital challengers grab market share, banks are ramping up digitalization project spending in a bid to secure the future.

SIGNS OF A SLOWDOWN

img img img
Global banking average annual revenue growth rate, 2010-2015 Global revenue growth rate, 2016 Overall decrease in banks’ profit margins, 2014-2016

US$90 billion Amount banks in developed markets could lose in profit by 2020 due to low economic growth and increased digital disruption

DIGITAL DEPOSITS

With digitalization projects multiplying across the sector, banks must spend a lot to successfully transform.

US$20.2 billion Amount U.S. banks planned to spend on hardware, software, services and IT staff to develop and implement digital transformation initiatives in 2017

img of U.S. banks’ IT budgets were devoted to digital transformation initiatives in 2017.
img of financial service companies undertook digital transformation initiatives in 2017.

>40% of their budgets will be spent on digital transformation initiatives by 2020.

img

STICKING POINTS

Yet targeted project benefits aren't guaranteed.

img of financial services IT leaders see a disparity between what executives expect from a digital initiative and what will be achieved.

img say there are currently not enough resources to achieve digital initiatives.

Sources: U.S. Banking Digital Transformation Spending Forecast, 2017-2020, IDC, 2017; Remaking the Bank for an Ecosystem World, McKinsey, 2017; A Brave New World for Global Banking: McKinsey Global Banking Annual Review 2016, McKinsey, 2016; 2017 Connectivity Benchmark Report, MuleSoft, 2017

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