In order to develop and implement digital transformation initiatives, retail banks in the US will spend about $16.6bn on hardware, software, services, and internal IT staff in 2015, according to new report from IDC Financial Insights.
This spending will increase at a compound annual growth rate (CAGR) of 10.4% into 2019. This compares to a growth rate of 3.9% for an overall IT spending by the US banks.
The study found that highest growth in digital transformation spending comes from software and internal IT.
According to the report, spending on IT services for digital transformation is a smaller, but not inconsequential, source of spending growth as well, forecast to grow at 8.5% year over year in 2016. Only hardware is keeping pace with total IT spending growth.
The growth of spending on digital transformation is outpacing aggregate IT spending by more than 2.5 to 1. As per IDC Financial Insights’ estimates fully one third of the IT budget at the US banks will be dedicated to achieving digital transformation in five years.
IDC Financial Insights global banking research director Jerry Silva said: "It’s like two teams of diggers making their way through a mountain to build a tunnel. They’re hoping they’ll be aligned when they meet in the middle and it’s a $16.6 billion bet."