Over 90 percent of survey respondents expect to increase their investment in analytics over the course of the next year.
A new survey of nearly 250 business and IT Wall Street professionals reveals that almost one-half expect 20-30 percent of their technology budget to be allocated for transformational initiatives in 2010 and 2011. The Wall Street professionals polled in the survey shared the view that the most likely increases in IT investments for analytics are expected to be in the areas of risk, compliance, and trading.
As firms prepare to meet the government's increased transparency demands, the research from Securities Industry and Financial Markets Association (SIFMA) and IBM found a greater focus on the development of systemic risk strategies. Of all regulatory activities, systemic risk was chosen by 55 percent of respondents to be the largest driver of IT investments. Building on that trend, risk analytics for compliance was ranked as the top analytics investment opportunity (37 percent) beating out categories such as analytics for client segmentation (21 percent) and external fraud (13 percent). Over 90 percent of survey respondents expect to increase their investment in analytics over the course of the next year.
While economic uncertainty still remains high, the new survey shows that concerns about the economy are waning from 2009. For the first time since the 2008 financial collapse, firms are revisiting the use of IT to promote organizational sustainability. Key priorities include innovating processes around trading, portfolio management and risk management. Surprisingly, client relationship management ranked last out of 17 categories with only 2 percent of participants selecting that option.
Despite the positive technology investment outlook, Wall Street professionals cite lack of IT staff and high implementation costs as the biggest inhibitors for technology implementation – which remains consistent with findings obtained in 2009. To overcome some of these challenges, the industry is showing a larger appetite for disruptive technologies such as cloud computing (61 percent) to force business model change.
"Coming out of the largest financial crisis in modern day history, there has never been a more important time for firms to capitalize on technology investments to make sense of the data and gain a more sophisticated understanding of risks," said Shanker Ramamurthy, general manager, IBM Financial Services Sector. "The road to recovery is built on infusing intelligence across operations, streamlining costs and getting back to basics so that firms once again focus on innovation and growth."
"As we noted in our recent white paper, the establishment of a systemic risk regulator will require a significant increase in technology resources," said Tom Price, managing director at the Securities Industry and Financial Markets Association. "Having the right technology in place is more essential than ever in efforts to monitor risk across firms and ensure regulators can identify and address potential problems before they escalate."
The survey was conducted by IBM, in conjunction with the Securities Industry and Financial Markets Association (SIFMA), to better understand attitudes toward both recent business and IT challenges in the industry and the priorities for future IT spending, given current market conditions. The announcement came at the recent SIFMA Financial Services Technology Expo.
Other key findings from the survey include:
- 90 percent of participants expect to outsource one or more of their processes
- Firms are most likely to outsource compliance reporting and analytics for risk
- Behind cloud computing, mobile technologies are expected to force significant business and operating model changes
About SIFMA
The Securities Industry and Financial Markets Association (SIFMA) brings together the shared interests of hundreds of securities firms, banks and asset managers. SIFMA's mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit www.sifma.org.
About IBM
For further information on IBM go to: www.ibm.com/financialmarkets.
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Wall Street Firms Set to Increase IT Spend Through 2011 on Transformation Initiatives
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