Healthy Rebound in BFS IT Services Spend – Growth Themes and Cautions

The continuing COVID-19 crisis has been accompanied by considerable uncertainty and change, leaving the Banking and Financial Services (BFS) industry grappling with several challenges and no direct answers to multiple questions: How will the world shape up after the pandemic? What will be the sourcing model of the future? Which technologies are likely to become must-haves? How will people and organizations adapt? While BFS firms were initially responding to the global pandemic and its immediate challenges, they will soon need to pivot towards recovering from the crisis with focus on growth and productivity. Already, organizations are reassessing their strategies on products, sales, customers, and partners. Amid this reassessment, the growth of digital has been a double-edged sword for the BFS industry. On the one hand, technology has helped banks generate additional revenue, reduce expenses, and manage risk exposure in a more efficient manner, while, on the other hand, it has opened the door for many competitors.

In this research, we study how Banking and Financial Services (BFS) firms have increased their digital spend to fast-track recovery and are investing in an agile, flexible, scalable, and platform-based operating model. We study the dominant themes that will help banks steer ahead on the road to recovery, including IT operating model realignment, the rise of hyper segmentation, customer demand pattern shifts, and the acquisition of digital capabilities.