Originally appeared in MiFID Monitor
US financial services firms will experience an average technology budget cut of 5% for 2009, according to a recent report by consulting firm Aite Group. The report, which is based on surveys of 28 senior technology executives at a cross section of US-based capital markets firms, indicates that these firms will spend roughly US$40 billion on technology in 2009, a US$2 billion cut from 2008 spending.
The firm also claims that projects may be frozen for reasons other than budgetary cuts during the first half of the year. However, Aite Group reckons that a reduction in costs will be a top technology priority over 2009. According to the report, 29% of respondents ranked cost reduction as their number one driver for IT investment.
Adam Honoré, senior analyst with Aite Group and a co-author of the report, believes that firms will have the opportunity to address items that have been sorely neglected under the auspice of effective risk management and reducing human cost. “The continued explosion of market data and asset class expansion are also sound drivers for using 2009 to fix latent issues. For the first time in many years, the expectation is not on supporting growth. Improving data quality, fixing bad business processes, getting rid of paper reporting, and improving exception handling are achievable goals for many technologists,” he explains.