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The retail banking IT spending market size is estimated to grow by USD 13.57 billion at a CAGR of 4.5% between 2023 and 2028. In today's digital age, the banking industry is witnessing a significant shift towards enhancing customer satisfaction, increasing operational efficiency, and embracing autonomous banking. Banks are leveraging advanced technologies such as Artificial Intelligence (AI) and Machine Learning (ML) to provide personalized services, streamline processes, and offer round-the-clock support. AI-driven chatbots and virtual assistants are becoming the new norm, enabling customers to conduct transactions and get answers to queries instantly. Moreover, the rise of autonomous banking, or Banking-as-a-Service (BaaS), is enabling third-party providers to offer banking functionalities as an add-on to their services, thereby increasing competition and driving innovation. In this evolving landscape, banks must adapt to these trends to stay competitive and meet the growing demands of their customers.
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Retail banking is a significant sector in the financial services industry, and IT spending plays a crucial role in its growth and development. With increasing competition, retail banks are investing heavily in IT technology to enhance customer experience, improve operational efficiency, and adapt to external stimuli. According to Celent, global IT spending in retail banking is projected to reach new heights in the coming years. Net interest income remains a primary revenue stream for retail banks, but inflationary pressure can impact their profitability. To mitigate this risk, banks are focusing on IT spending to innovate and offer value-added services. IT investments are being made in areas such as networks, hardware, and IT services to ensure resilience and sustainability. Customer satisfaction and competitive position are key drivers for retail banks in their IT spending decisions. IT investments are being made to improve customer service propositions, streamline processes, and provide personalized offerings. The use of technology in retail banking is also essential for operational efficiency and risk management. However, IT spending in retail banking comes with risks. Banks must ensure that their IT investments align with their strategic goals and provide a solid return on investment. Additionally, they must prioritize cybersecurity to protect customer data and maintain trust. Overall, retail banking IT spending is a critical investment area for banks looking to stay competitive and meet the evolving needs of their customers. Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The growing need for greater customer satisfaction is notably driving market growth. In the retail banking sector, the growing customer base and expanding geographical reach necessitate advanced solutions for managing customer relationships and enhancing productivity. Modern banking software plays a pivotal role in addressing these requirements. By implementing cutting-edge technologies such as online transaction systems, mobile banking, and digital banking, enterprises can cater to evolving consumer expectations. These solutions enable customers to access their accounts from anywhere, at any time, and from any device.
Moreover, the integration of artificial intelligence (AI), data analytics, and cloud-native ecosystems, including Infrastructure as Code and containerization technologies, empowers banks to streamline operations and improve customer service. Additionally, security measures like threat detection, prevention technologies, data encryption, blockchain technology, and fraud protection, as well as identity management, are crucial components of banking software. These features ensure the protection of sensitive customer information and maintain trust in the digital banking landscape. Thus, such factors are driving the growth of the market during the forecast period.
The incorporation of analytics into third-party banking software is the key trend in the market. In today's digital age, retail banking customers are increasingly relying on mobile devices and online transaction systems for banking services. This shift towards digital banking has resulted in an influx of customer data for financial institutions. To maximize the potential of this data, banks are investing in advanced banking software equipped with data analytics capabilities. These solutions enable institutions to gain valuable insights into customer behavior, preferences, and trends, leading to improved decision-making and enhanced customer relationship management.
Moreover, the adoption of cutting-edge technologies like artificial intelligence (AI), machine learning, and data encryption is transforming the banking industry. Cloud native ecosystems, infrastructure as code, and containerization technologies are facilitating cloud migration, ensuring business continuity and scalability. Furthermore, threat detection and prevention technologies, along with identity management and blockchain, are crucial for securing digital transactions and protecting against fraud. By embracing these digital advancements, financial institutions can optimize their operations, reduce risk, and meet evolving consumer expectations. Thus, such trends will shape the growth of the market during the forecast period.
Issues related to data privacy and security are the major challenge that affects the growth of the market. In the realm of retail banking, IT spending is being significantly influenced by digital transformation. Customer expectations for superior customer support and productivity are driving banks to adopt cutting-edge technologies such as online transaction systems, mobile banking, and digital banking. However, data privacy and security remain major concerns in this context. Traditional banking systems are based on a complex infrastructure of open-source codes, making them susceptible to risks.
Furthermore, cloud infrastructure, which is increasingly being adopted due to its ease of use and scalability, is particularly vulnerable to glitches in source codes and potential unauthorized access. Hackers can exploit these vulnerabilities to gain access to sensitive consumer data, leading to potential fraud and identity theft. To mitigate these risks, banks are investing in advanced technologies such as artificial intelligence, data analytics, and blockchain technology for threat detection, prevention, data encryption, and fraud protection. Infrastructure as Code and containerization technologies are also being adopted for a more secure and efficient IT ecosystem. Hence, the above factors will impede the growth of the market during the forecast period
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Accenture Plc - The company offers a wide range of banking services such as payments, core banking, credit, banking cloud, open banking, and sustainable banking.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market share growth by the IT services segment will be significant during the forecast period. Retail banking institutions continue to invest significantly in IT technology to enhance customer experience, adapt to regulatory changes, and remain competitive in a globalized market. IT spending in retail banking includes areas such as application development and maintenance, system integration, IT consulting, software deployment and support, and hardware deployment and support. IT consulting services play a crucial role in helping banks align IT strategies with business objectives and drive IT initiatives in business processes.
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The IT services segment showed a gradual increase in the market share of USD 30.06 billion in 2018. Technology advancements, consumer preferences, inflationary pressure, and economic developments are key external stimuli influencing retail banking IT spending. Infrastructure investments, particularly in cloud spending, are essential for operational efficiency and sustainability. Vendors like Microsoft are driving innovation through new consulting organizations focusing on technological domains such as Azure Cloud and AI, ensuring retail banks remain resilient and competitive in the ever-evolving retail banking landscape. IT workforce development and regulatory compliance are also critical considerations for retail banks as they navigate the challenges of a dynamic business environment. The focus on value proposition, customer satisfaction, and revenue streams necessitates a continuous adaptation to market trends and risks.
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North America is estimated to contribute 45% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
Retail banking institutions continue to invest significantly in IT technology to enhance customer experience, adapt to changing consumer preferences, and maintain operational efficiency in the face of inflationary pressure and economic developments. According to a report by Celent, retail banks worldwide spent an estimated USD52 billion on IT in 2020. This spending includes infrastructure, hardware, software, IT workforce, and cloud services. Technological advancements, regulatory changes, and globalization are driving retail banks to innovate and diversify their service propositions. Net interest margins are under pressure due to low-interest rates, making it essential for banks to explore new revenue streams. Customer satisfaction and competitive position are key priorities, and IT services play a crucial role in delivering a superior customer experience. Banks are focusing on sustainability, resilience, and risks in their IT strategies. External stimuli, such as the shift to digital banking and the increasing use of mobile applications, are also influencing IT spending. The IT workforce is essential in implementing technological solutions and ensuring the smooth running of IT systems. As retail banking becomes increasingly complex, the need for operational efficiency and a strong value proposition is more important than ever.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion " for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
US Retail Banking Market: US Retail Banking Market by Type, Service, and Channel - Forecast and Analysis
Retail Banking IT Spending Market: Retail Banking IT Spending Market by Type and Geography - Forecast and Analysis
Core Banking Solutions Market: Core Banking Solutions Market Analysis North America, Europe, APAC, Middle East and Africa, South America - US, China, Japan, Germany, UK - Size and Forecast
Retail banking is undergoing significant transformation as customers' preferences shift towards digital channels and technological advancements reshape the industry. IT spending plays a crucial role in retail banks' ability to adapt and stay competitive. According to Celent, global IT spending in retail banking is expected to reach USD120 billion by 2025. Retail banks invest in IT to enhance customer experience, improve service propositions, and operational efficiency. Net interest income remains a primary revenue stream, but banks must navigate inflationary pressure and economic developments to maintain profitability. IT infrastructure, including networks, hardware, and software, is essential for banks to provide reliable and secure services.
Furthermore, cloud spending is a growing area of IT investment, enabling banks to scale their operations and reduce costs. Technological advancements, such as artificial intelligence and machine learning, help banks personalize services, improve risk management, and enhance sustainability and resilience. Regulatory changes and external stimuli also require banks to innovate and adapt to remain competitive. Banks must balance IT spending with the need to maintain a skilled IT workforce and ensure regulatory compliance. IT services, including consulting, implementation, and support, are essential to help banks leverage technology effectively and stay ahead of the competition. Ultimately, IT spending in retail banking is a critical investment in the future, enabling banks to meet customer expectations, enhance revenue streams, and secure their competitive position.
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Market Scope |
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Report Coverage |
Details |
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Page number |
162 |
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Base year |
2023 |
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Historic period |
2018 - 2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 4.5% |
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Market growth 2024-2028 |
USD 13.57 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
4.23 |
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Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
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Performing market contribution |
North America at 45% |
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Key countries |
US, Canada, China, Germany, and UK |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Accenture Plc, Atos SE, Capgemini Service SAS, CGI Inc., Cisco Systems Inc., Cognizant Technology Solutions Corp., Dell Technologies Inc., Fidelity National Information Services Inc., Fujitsu Ltd., Genpact Ltd., HCL Technologies Ltd., Hitachi Ltd., HP Inc., Infosys Ltd., Intel Corp., International Business Machines Corp., Microsoft Corp., NetApp Inc., Oracle Corp., SAP SE, Wipro Ltd., and WNS Holdings Ltd. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for market forecast period |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Opportunity/Restraints
10 Competitive Landscape
11 Competitive Analysis
12 Appendix
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