In recent years, financial institutions have accelerated their digital transformation by building increasingly complex structures to manage technology, data, and operations. What were once traditional IT departments have become technology divisions with thousands of employees, innovation hubs spread across multiple countries, and a growing presence in strategic committees.
But are these banking technology divisions truly ready to meet today’s customer expectations?
Size and budget don’t always guarantee results. While some divisions have positioned themselves as key players in their banks’ evolution, others still face structural barriers that limit their impact. What explains these differences? What challenges remain in 2025? And more importantly, how can banks get more value out of these structures.
This article looks at how banking technology divisions have evolved, their current level of adoption, their strengths and weaknesses, and some of the factors that could make a difference in the years ahead.
Growth and adoption of technology divisions in the banking sector
The steady increase in tech investment has been a key driver behind the transformation of technology divisions within banks. According to McKinsey, in 2023, banks allocated $650 billion to technology. This spending has grown at an average annual rate of 9% in recent years—well above the sector’s revenue growth rate of 4%.
This rise in investment has allowed financial institutions to restructure their tech divisions, giving them a more central role in business strategy. According to Boston Consulting Group, 96% of banking technology leaders say their role has become more strategic, and 87% are already part of the bank’s executive committee. Additionally, 45% report significant transformation in their areas over the past three years, compared to just 31% in other industries.
This shift is also reflected in how banks organize their teams. According to the CIO Executive Council, 65% of institutions now structure their technology divisions around digital products and services, enabling greater agility and alignment with business priorities. Moreover, 94% of CIOs say the line between business and technology has blurred, fostering closer collaboration between both areas.
On the operational side, the use of modern development methodologies has also become more established. The same report highlights that 89% of CIOs in the financial sector use agile methodologies, and 78% have built internal DevOps capabilities—allowing for faster and more efficient delivery of tech solutions.
Investment in banking software: Figures and priorities
The banking industry continues to invest steadily in software to modernize its systems and keep pace with digital transformation. In 2024, banks and investment services in the United States spent approximately $107.8 billion on software, according to Deloitte. In that market alone, around 100,000 employees work in software development, and some major banks dedicate between 15% and 25% of their workforce to these roles.
Globally, according to Precedence Research, the core banking software market reached $12.51 billion in 2024 and is expected to grow to $13.79 billion in 2025, with an average annual growth rate of 10.22% through 2034. This trend reflects the modernization of critical systems with cloud-based solutions, stronger security, and a greater focus on customer experience.
In investment banking, a study by UpSlide shows that 100% of IT and innovation leaders plan to invest in new software solutions over the next 12 months. The top priorities are automation and document management (mentioned by roughly 40–45% of respondents), along with CRM and cybersecurity.
Real-world examples of technology divisions in banking
Some financial institutions have made significant progress in shaping their technology structures, adopting organizational models designed to respond more quickly to the challenges of the digital landscape.
These divisions no longer focus solely on maintaining IT infrastructure—they are increasingly taking on a strategic role within the bank, with responsibilities ranging from innovation to the design of new digital products and services:
- Banco Santander merged its technology and operations divisions into Santander Global Technology and Operations. This subsidiary manages all of the bank’s technology, including apps and ATMs, and is part of the One Santander project, which aims to establish a unified operating model across all the group’s markets. It operates in the group’s 10 main markets and directly employs 6,500 people, coordinating a total of 20,000 professionals in tech and operations.
- CaixaBank has two key divisions focused on technology and innovation: DayOne and CaixaBank Tech.
- DayOne is the division dedicated to tech companies, start-ups, scale-ups, and investors. Since its launch in 2017, it has quadrupled its client base and become a leading financial partner in the entrepreneurial ecosystem.
- CaixaBank Tech is the group’s tech subsidiary. In 2025, it began an expansion process aimed at surpassing 2,000 employees within three years. The division is actively recruiting specialists in backend, frontend, artificial intelligence, cloud, data engineering, and data security.
- Bankinter has recently launched a digital banking division that will integrate EVO Banco’s user base, making it the group’s largest unit in terms of clients. It will serve as a digital lab for testing new products and evolving the bank’s digital assets. The division is positioned as the growth engine for the bank’s retail segment, with a strong focus on innovation and digital transformation.
Technology divisions in 2025: Challenges and strengths
In 2025, banks’ technology divisions face a complex reality: they are essential to digital transformation but operate under constant pressure to prove their value. Based on the latest reports from firms like McKinsey, BCG, and the CIO Executive Council, we examine the main challenges these departments face, along with the strengths that continue to drive them forward.
Strengths of technology divisions
Despite structural challenges, some technology divisions have consolidated key capabilities that position them as strategic areas within financial institutions. Their role goes far beyond technical support—they are now drivers of innovation, operational efficiency, and the development of new business models.
Key strengths include:
- Investment as a transformation driver: While not always well managed, strong tech investment has laid the foundation for deep transformation—especially in banks that have adopted a strategic approach to technology.
- Cross-functional collaboration: Some institutions have moved beyond the traditional siloed IT model, promoting shared governance between the CEO, CFO, CIO, and business units. This alignment helps ensure technology supports the bank’s value goals.
- Operating models integrated with the business: According to BCG and the CIO report, the most successful banks have built structures where tech and business teams operate as one, sharing KPIs and having the autonomy to redesign processes. This setup improves agility, decision-making, and overall efficiency.
- Modular and scalable architectures: The adoption of cloud platforms and modular architectures has allowed many tech divisions to reduce costs, speed up development, and bring new products to market more quickly.
Challenges facing technology divisions
Despite these advances, structural barriers continue to hinder the optimal performance of many technology divisions. The shift toward more agile and efficient models has been uneven, and several persistent obstacles still limit the impact of technology on business outcomes.
The most relevant challenges identified include:
- Limited competitive differentiation: Increased tech spending doesn’t guarantee a competitive edge. Innovations quickly become standardized and easy to replicate across the market.
- Little room for discretionary innovation: According to McKinsey, up to 70% of technology budgets go toward keeping the bank operational and compliant, leaving limited space for transformative initiatives.
- Fragmented decision-making with no strategic vision: Without clear direction from top leadership, investments are spread across too many small projects that fail to reach scale.
- Focus on cost control over value creation: The widespread use of “time and materials” models prioritizes spending limits over the actual impact each initiative can deliver.
- Difficulty demonstrating value to investors: The lack of financial metrics tied to technology makes it harder for stakeholders to understand its real contribution, reinforcing the perception of technology as a cost rather than a value driver.
Why some technology divisions are falling short
While many technology divisions have shown clear strengths, not all are delivering the expected impact. A closer look at the ongoing challenges reveals that internal investment efforts to lead digital transformation can pay off—but they also expose banks to significant risks if those efforts don’t translate into tangible results or lasting competitive advantages.
For mid-sized and smaller banks, limited funding capacity reduces their ability to build strong, competitive technology structures. The push to modernize often clashes with scarce resources, making it harder to attract specialized talent, adopt new architectures, or sustain an ambitious long-term tech strategy.
Even in cases where investment is substantial, it doesn’t always lead to measurable outcomes. The lack of a clear, business-aligned strategy makes it difficult to prioritize initiatives that truly deliver impact. Fragmented decision-making, the absence of shared architectures, and a lack of common metrics further undermine operational efficiency.
On top of this, some technology divisions still struggle to clearly communicate the value they create—reinforcing the perception of technology as a cost center rather than a growth driver. A large share of the budget continues to go toward maintaining day-to-day operations and meeting regulatory requirements, leaving little room for transformative efforts. All of this happens in a context where legacy systems remain a major barrier to adopting more agile, scalable models.
How to improve the structure of technology divisions and demonstrate their value
Some banks are rethinking how they structure their technology areas to respond more effectively to today’s challenges. While there is no one-size-fits-all model, certain common strategies are emerging among institutions aiming to strengthen the impact of their technology divisions:
- Align technology and business more closely, with initiatives designed from the start to share goals and metrics.
- Shift from traditional functional models to product– and service-oriented structures to increase agility.
- Modernize technology architectures by adopting modular platforms, cloud-based solutions, or more scalable infrastructures to reduce reliance on legacy systems.
- Foster a culture of innovation and attract specialized talent, particularly in areas like data, artificial intelligence, and cybersecurity.
- Give technology leaders a more active role in strategic decision-making to enable tighter integration with the rest of the business.
At the same time, some banks are exploring partnerships with external tech companies. This approach offers a way to accelerate the development of specific solutions, reduce costs, or bring in specialized capabilities without having to take on the full effort in-house.
At Latinia, we’ve spent more than 20 years working with financial institutions, delivering real-time decisioning solutions designed specifically for the sector. Our technology helps banks optimize customer communications through advanced analysis of transactional data—enabling more timely, relevant, and effective interactions.
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Categories: Cloud & Tech