As the retail banking delivery model is upended, financial institutions will increasingly focus their budgets on digital transformation, with spending growing at a compound annual growth rate of 10.4% into 2019, predicts IDC.

This compares to a growth rate of just 3.9% for overall IT spending by US banks, meaning that within five years a third of tech budget will be dedicated to bringing the industry into the digital age.

The highest growth in digital transformation spending comes from software and internal IT, with tech services also seeing a big leap and only hardware lagging. Spending on consumer initiatives and infrastructure improvements will continue to lead the way, while payments will also see a healthy proportion of spend as well. 

Jerry Silva, global banking research director, IDC Financial Insights, says that investment is happening from two opposite ends of banks, with line of business executives buying consumer-facing tech while the CIO and IT groups try to transform the bank's infrastructure from the inside out.

"It's like two teams of diggers making their way through a mountain to build a tunnel. They're hoping they'll be aligned when they meet in the middle and it's a $16.6 billion bet," says Silva.