- In spite of economic uncertainty, US banks’ tech spending are expected to increase 10.6% year over year in 2022—faster than any previous year.
- Investors are concerned about profitability and transparency over spending plans. Banks will continue to face demands to justify their spending level.
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The trend: We expect US banks’ investment in technology to increase 10.6% year over year in 2022, faster than in any previous year—despite the looming threat of a recession and financial market turmoil, which will compound internal and external pressure on banks to curtail their budgets.
Insider Intelligence
Our report on US Bank Technology spending looks at why US bank technology spending will hit nearly $86 billion in 2022 and grow to almost $112 billion by 2026.
The risk of recession: Banks currently face an inverted yield curve, rising interest rates, high inflation, and uncertainties surrounding Russia’s invasion of Ukraine. 28% of economists surveyed by the Wall Street Journal expect the US to be in recession some time in the next 12 months, a marked jump from 18% in January, and 13% a year ago.
In the past, when the economy constricted, firms responded with cost-cutting measures. But this may not be the best strategy now, when much of the banking industry is still in the middle of extensive digital banking transformation efforts.
Where are banks spending? There’s an arms race going on among neobanks and incumbents for the best digital customer experience. A majority of consumers, or 54%, are using digital banking tools more now due to the pandemic, according to the 2021 digital…
Read More: US Banks’ Investment in Tech to Increase Faster Than Ever
