Financial institutions face rising IT budgets as they balance innovation, legacy and regulation: Celent

Financial institutions are entering 2026 with competing exertion priorities, from scaling artificial quality (AI) capabilities and strengthening information governance to modernising bequest systems and managing rising regulatory demands.
Celent’s research, based connected its comprehensive IT Dimensions survey of more than 1,000 executives astatine fiscal institutions, reveals that IT budgets are expected to emergence by an mean of 7% successful 2026 with important saltation crossed the fiscal services industry. As a result, institutions crossed the committee are being forced to marque tougher decisions astir wherever exertion concern volition present the top value.

Tom Scales, Principal Analyst astatine Celent, said: “Budgets are rising, but truthful are expectations. Choosing the incorrect exertion bets tin person existent competitory consequences. It is large to spot beingness and annuity insurers investing and catching up.”

Insurance is starring the complaint successful integer transformation. The biggest expected IT fund rises are expected to surge by 13.8% successful beingness security and 12.9% successful P&C insurance.

Scales added: "Insurers are ramping up their IT walk this year, with galore moving from experimenting with innovations to afloat implementation. Celent expects immoderate existent operational impact, with advances successful generative and agentic AI, automation, real-time information platforms, and real-time hazard monitoring. Not to notation that galore insurers are modernising bequest systems."

The lowest expected IT fund increases are seen successful the superior markets segments, astatine lone 3.7% connected the bargain side.

Cubillas Ding, Capital Markets Research Director astatine Celent, said: “Buyside firms proceed to look pressures from borderline compression, and achieving standard remains a defining challenge. The manufacture is consolidating, but exertion and AI enablement stay captious for differentiated strategies that support profitability, prolong relevance, and present tailored concern outcomes. Looking up to 2026, Celent expects firms to execute parallel initiatives: operationalise AI portion pursuing integer and unreality migrations of halfway systems.”

Closer to the mean budgetary increases prevarication banks, with firm banks expected to spot a 5.8% fund rise. For these companies, determination are 3 factors astatine play: the precise biggest banks are investing immense sums, the immense bulk of walk is mandatory (keeping the lights connected oregon regulatory), and the fund disposable for innovation and alteration is falling.