The Beat on the Street

Financial Firms and Tech Spending
Financial firms in North America spend more on IT than any other industry, but where does the money go? In a study done by Forrester Research on financial-services-tech spending, 874 North American executives, including 80 financial-industry executives, responded to questions that shed some light on how IT is used in the financial industry.

For starters, the financial industry is spending more money on networked-storage projects, with 32 percent of firms pursuing SAN projects and choosing voice over IP. Tom Pohlmann, an analyst at Forrester Research and one of the authors of this report, adds that a possible reason for these percentages is that financial-services firms are more likely to take risks.

Financial firms also lead in purchasing the most server hardware, with 84 percent adding to their server racks this year. When asked about vendor choices, companies indicated that they were most likely to purchase server hardware from Compaq (49.9 percent), followed by Sun Microsystems at 44.3 percent. Sun's popularity increased over last year, which Pohlmann attributes to "their strength in high-end, high-availability computing."

The survey also shows that there has recently been a decrease in CRM interest, possibly because 30 percent of financial companies have already completed CRM rollouts.

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Wealth Increases Despite Tough Conditions
While global economies suffered this past year, high-net-worth individuals (HNWIs) were able to persevere, with both the number of global HNWIs and their net worth rising 3 percent. Alvi Abuaf, director, Global Securities Industry Consulting, Cap Gemini Ernst & Young, explains, "HNWIs are more sophisticated, more diversified and, probably most importantly, they get timely, customized advice as opposed to (managing investments) themselves."

Abuaf notes managing these relationships will provide a substantial opportunity for outsourcing, which is a major upcoming trend. "Open architecture allows that they will be able to provide products from anybody, not just from their own company."

In addition, he notes that the processing area will need unification. "These are the companies that will process a lot in the back office and scale will be extremely important, here we will see consolidation. Wealth-management providers will have to be cost-efficient and global, especially considering STP that will provide them with cost efficiencies."