Financial markets up spending on IT in year ahead

Gordon Peters
Wednesday, 17 November 2010 19:10

IT Industry - Market

There is a positive outlook for growth in spending on IT in the global financial markets sector next year, with predictions that the sector will increase its spend on IT vendors by 4.5 per cent in 2011.

According to forecasts by the independent technology analyst, Ovum, the predicted spend is significant when compared to 2010 when overall spending on IT by financial markets companies grew by just 0.3 per cent and 2009, when there was a 4.2 per cent decline.

Daniel Mayo, Ovum analyst and author of the new report, says that the growth will occur as companies look to improve performance and comply with new regulations, and will also be driven by businesses striving to improve their performance and agility and a need to invest significantly in compliance and reporting systems.

'The financial markets sector as a whole will be volatile in 2011, but this will not be detrimental to IT spending and will provide significant opportunities for vendors. Businesses will be looking for IT systems that ensure their front offices are performing as well as they can, while they will want to make their back offices more automated'.

'They will also be investing heavily in systems that help them comply with the barrage of new regulations brought in since the global financial crisis.'

While all this will drive strong growth opportunities for vendors, according to Mayo, procurement departments will still be looking to drive down prices and decision making will be volatile as institutions freeze or delay projects in response to market changes.

'Vendors also need to be aware that the Asia region will continue to grow in importance for IT spending in 2011 and investment will increasingly be directed to hubs there by enterprises, ' Mayo said. 'London and New York will remain the key hubs but banks will shift some of their power to the Asia region (Singapore and Hong Kong as top beneficiaries), which will become more and more influential as senior executives relocate there. For this reason, a credible presence in Asia will be critical for vendors in 2011.'