Banking, insurance and finance companies worldwide will spend $362 billion on IT in 2005, according to analysts at the TowerGroup.
The banking industry will increase its IT commitment by 4.4%, while the securities and investment sector will raise its spending by about 4%.
In contrast, IT budgets in the insurance industry will be flat, despite the fact that the segment is facing a raft of regulatory and corporate governance challenges, say TowerGroup researchers. These patterns will be accompanied by the continued evolution in the way that IT investments are managed.
"Financial institutions will implement processes and technology changes in more manageable chunks and employ business process management and networked services as pivotal elements for strategic transformation," said Guillermo Kopp, vice president of the TowerGroup cross-industry research practice.
Increasingly, the CIOs of financial institutions will have to draw up strategic roadmaps to cut across their organisation's historic IT 'silos' so that they can better serve customers, added Kopp.
Similarly, analysts at the Meta Group have suggested that the major driver of IT investment in the financial services sector will be "maximising the efficiency of IT infrastructure assets through cost-saving moves, such as consolidating operations inherited through mergers and acquisitions, or co-locating data centre operations with other financial services companies."
However, there will also be increased pressure on the IT department to provide visibility and transparency in their operations.
"CIOs are acutely aware of the need to relate actual costs incurred to business benefits achieved," said Meta Group analyst Jed Rubin.