Investment and Commercial Banks Boost Technological Expenditure
In a recent report titled "Corporate and investment bank spending in unpredictable times," Crisil Coalition Greenwich has provided insights into the overall spending trends of major investment banks, breaking down spending by function and examining banks' strategies related to spending, revenues, and profitability.
The report reveals that about half of overall CIB spending was allocated to the front office, primarily for people (compensation and benefits). The other half was distributed among functional areas including operations, technology, control, and other supporting roles such as human resources.
One of the key findings is the significant increase in technology spending. U.S. bank spending in technology grew 34% since 2019, while EMEA-based banks saw a 20% increase. In 2024, the global investment banks that make up the Coalition Index spent nearly $35 billion on technology, making it the second largest line item within the CIB business. This represents a 29% overall increase in technology investment from 2019 to 2024.
Despite the increased spending, the report shows that these banks have managed to grow their revenues. Revenue grew 9% in the same period, reaching $262.9 billion in 2024. The top 12 corporate and investment banks globally spent $159 billion in 2024, a 3.4% increase from 2023.
Stephen Bruel, Senior Analyst on the Market Structure & Technology team at Crisil Coalition Greenwich, stated that this spending growth is a continuation of a longer-term trend. He also mentioned that senior decision-makers are focused on ensuring that spend in the back office enables front-office strategies.
In unpredictable times, banks understand that spending is required to serve clients, achieve growth, and create scale, but they must also control costs to improve profitability and return on equity. Stephen Bruel predicts that market volatility in early 2025 could increase the focus on bank spending.
The report does not discuss specific changes in spending figures or percentages from previous years. It also does not mention any supply chain disruptions that could impact bank spending, new geopolitical conflicts or challenges in global trade, or changes in the amount spent on technology by the global investment banks that make up the Coalition Index.
Banks are focusing on optimizing spending, including overall spend and the usage of their financial resources, in unpredictable times. The report does not discuss any new strategies or initiatives that banks are implementing to achieve this.
The banks belonging to the Coalition Index are part of the research and analysis by Crisil Coalition Greenwich; however, the specific banks are not explicitly named in the search results. The analysis by Crisil Coalition Greenwich mentioned pertains to the year 2025. They present the 2025 Coalition Greenwich Share Leaders and Best Banks in various categories such as Middle Market Banking in the US.
Overall, the report highlights the importance of technology spending for investment banks and the need for banks to balance spending with cost control in order to maintain profitability and return on equity in unpredictable market conditions.
