Optimizing IT costs: a strategic challenge for the financial sector
Published April 23, 2025
- Corporate Finance & HR, Risk & Procurement
- IT Strategy & CTO Advisory
IT costs in the banking and insurance sector continue to rise, with an annual increase of 5 to 8.5% (Gartner, 2023). This inflation is driven by growing needs in cybersecurity, infrastructure modernization, and the adoption of technologies such as cloud computing and artificial intelligence. Even more concerning, 70% of budgets are allocated to run, maintenance, and infrastructure, significantly limiting IT departments’ ability to fund innovation projects.
In the face of this pressure, optimizing IT expenses has become crucial in order to generate margins and refocus resources on strategic priorities.
Towards more efficient and optimized IT
Companies in the sector must adopt a more rational and targeted approach to managing their IT. Beyond cost reduction, technological investments must be more relevant and efficient, at least in three key areas:
Too often, budgets are consumed by projects that do not deliver real added value. Carefully selecting strategic initiatives, halting those with no measurable impact, and ensuring strict monitoring of expected benefits helps avoid unnecessary resource dispersion.
Improving operational efficiency, notably through process automation and the adoption of Agile and DevOps methodologies. Additionally, adjusting the service offering to real needs, better calibrating technical resources, optimizing sourcing, and quickly reallocating teams to priority projects help reduce costs while maintaining productivity.
Application rationalization and tool pooling offer significant savings opportunities. Adopting a pay-per-use model, particularly through SaaS and cloud services, allows for greater flexibility and better control over expenses. However, this transformation must be accompanied by a redefinition of the IT economic model to avoid simple cost transfers without real gains.
2 complementary approaches for IT cost optimization
| IT optimization by levers | Zero-Based Budgeting (ZBB) |
|---|---|
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This methodology involves analyzing overall expenses and identifying optimization levers that can be applied. By grouping expenses into broad categories, opportunities for optimization can be identified, such as rationalizing providers, optimizing software license management, and better matching skills to actual needs. Beyond these levers, one of the most powerful tools is benchmarking. Comparing costs and key operational ratios with industry standards highlights discrepancies and identifies areas where gains are possible. |
This methodology goes further by analyzing each expense line by line with stakeholders. The goal is to question every expense: Is it justified? Is it aligned with strategic objectives? This systematic approach helps identify savings that are often difficult to detect through traditional lever-based analysis. |
Depending on the objectives, these approaches can be combined: a Top-down analysis identifies key optimization areas, while a Bottom-up, line-by-line review provides a detailed understanding of costs and a deeper transformation.
The key elements of a successful efficiency plan
Implementing a more efficient IT model is not just about revising budgets. Three key elements ensure sustainable results:
Raising awareness among teams, aligning business units with new objectives, and ensuring that every stakeholder understands and adopts new practices. Cost reduction should be viewed as a lever for efficiency, not an imposed constraint.
The ultimate goal is to establish a culture of sustainable efficiency by implementing continuous performance monitoring and precise indicators to adjust decisions in real time.
Continuous adaptation based on field feedback and market developments.
In a highly uncertain environment, all actors in banking and insurance are striving to optimize the value produced by their IT. The goal is to reduce unnecessary spending and improve efficiency to free up investment capacity for projects, technologies, and skills that will make the difference. It is also about fostering a culture of IT performance management, which is the only way to ensure IT alignment with strategic needs.