Wall Street Set to Invest in Technology

The US financial industry seems to be shaking off its recessionary doldrums and is once again looking to invest a considerable portion of its IT budget into transformative informational technologies, if a new study carried out by IBM and the Securities Industry and Financial Markets Association (SIFMA) is any indication.

"There is a bigger appetite for new technology than we've seen in the past," said Suzanne Duncan, an analyst for IBM's Institute of Business Value who specialises in financial markets. "This is a very healthy trend for the industry."

The two organisations invited 240 Wall Street IT professionals and business managers from both large and small firms to take an online survey. The survey, the third annual, was conducted in late May and early June.

According to the results, about one-half of finance firms expect to devote 20 to 30 per cent of their 2010 and 2011 IT budgets to new initiatives. This part of the budget will stand apart from the funds dedicated to usual maintenance and upgrades. Half of the organisations surveyed also indicated that their IT budgets will increase in the next two years.

Those surveyed also have shown an increase in interest in new technologies such as cloud computing and mobile computing. About 61 per cent of these organisations expect to invest more in cloud computing, and 47 per cent said they'll spend more on mobile technologies.

The interest in increased IT investment could stem from the ebbing recession, as well as anticipated regulatory reform, which would require new technologies to manage, the study found.

One especially desired technology area in the survey was risk analytics, or, as Duncan described it, "building intelligence around risk." Approximately 90 per cent expect to increase spending in this area. In past years, firms had indicated that they had the data to take measure of the risk factors of their various operations, but did not fully analyse this data. Again, regulatory reform seems to be driving this greater appetite for new technologies.

The survey also found that 90 per cent of participants indicated that they expect to outsource one or more processes. A process could be something like trade confirmations or derivatives processing.

IBM plans to discuss the findings further during the SIFMA Financial Services Technology Expo, being held in New York this week.

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