Integration a Top Priority, According to Deloitte Report

Breaking down silos is a major goal for global securities firms this year, according to a recent financial industry outlook released by Deloitte & Touche.

Firms that want to maintain a competitive edge are shifting from product-centric legacy systems to comprehensive wealth management platforms in order to better identify their clients' needs and support the cross-selling of different financial products. "Financial institutions that don't focus on holistic customer needs are going to be substantially left behind," says Adam Louis Schneider, principal, Deloitte Consulting. But, he adds, the technological development needed to meet those needs won't come cheap.

TowerGroup calculates that spending on wealth management technology already has surpassed $2 billion annually and will exceed $3 billion by 2008. Jeff Kottkamp, national managing partner at Deloitte & Touche, says that in an effort to make the most out of existing technology investments and cut costs, more and more firms are turning to service-oriented architecture (SOA).

SOA supports integration by allowing firms to mix and match technologies without fundamental redesign. In effect, it enables cumbersome data-crunching legacy systems to interconnect with swift front-facing applications. "You can't just abandon your legacy systems and technologies," explains Kottkamp. "You really have to consider what [those systems] had programmed into them that was important," he continues. "You don't throw everything away and start over."

Some common IT initiatives currently being implemented at many financial institutions include automating financial advice and execution, and creating infrastructure that's flexible enough to meet firms' ever-changing business demands. According to the Deloitte report, this infrastructure should "be able to address the unique requirements of multiple end users such as clients, financial advisers and specialists in customer service, securities, banking and insurance without creating separate architectures." It should also be adaptable, easily allowing IT to "choose between vendor and in-house development as new needs arise."

"We're seeing significant energy and spending because this is IT responding to a business change," says Deloitte Consulting's Schneider. "Firms need to be able to sell multiple products to their clients."