The analyst house expects spending on IT products and services to pick up slightly, growing to $364.5 billion by 2010, a 0.9% CAGR from 2008 to 2010. But this still pales in comparison with a 4.5% rise in tech spending in 2008 and 6.4% growth in 2007.

All regions will be affected but IT spending by European and North American financial institutions will suffer the most, although they continue to be the biggest spenders, accounting for 37.7% and 33.5%, respectively, of global investments.

Asia Pacific will witness the fastest growth in technology spending, with a CAGR of 4.1% from 2008 to 2010. Total spending in the region is expected to reach $90.3 billion in 2010. Latin America and Africa are expected to grow at a relatively modest rate of 3.1% with spending in this region growing to $21.2 billion in 2010.

"Growth rates have dropped across all regions and contributed to lower levels of spending. European and US financial institutions have been hit particularly hard, and challenges in these regions are contributing to growth declines," says Jacob Jegher, senior analyst, banking group, Celent.

The economic woe will also prevent financial institutions spending on new IT investments as they concentrate on maintenance. Of the total spending on technology in 2008, a whopping 71.9% went on maintenance and this trend will continue in 2010, says Celent.

Among the industry verticals, banking accounts for the largest portion of the total technology outlay, nearly 50%, and is estimated to reach $160.4 billion in 2008. IT spending on insurance and securities and investments activities is expected to reach $103 billion and $74.7 billion, respectively.