The global securities industry will invest $71.5 billion in information technology in 2004, with the highest percentage growth in asset management, according to the latest estimates from research house TowerGroup.
TowerGroup finds that while the double-digit IT spending increases are a thing of the past, firms are now ready to invest in technology at a controlled and measured pace. The $71.5 million forecast spend represents a marginal increase of 1.4% over 2003, still far below the highs hit in IT spending of $86.2 billion back in 2000.
According to the research, the North America securities industry is pulling ahead of the rest of the world in percentage of IT spending, albeit marginally. In 2004, North America will account for over 42% of worldwide securities IT spending, up from 40% in 2001.
CIOs in the North American securities industry are becoming more reliant on external technology providers, says TowerGroup. In 1996, securities firms allocated 43% of IT budgets to external technology providers. TowerGroup projects that this number will grow to 58% by 2008.
The biggest spenders over this period will be the asset management sector, reversing the declines of the past three years.
There will also be growth in institutional and retail brokerage.
TowerGroup projects that broker/dealers will globally spend nearly $50 billion on institutional technology maintenance and development in 2004, up slightly from 2003.
And after three years of minimal to flat growth in IT spending, the North American retail brokerage industry is spending again in 2004 with a budget of over five billion dollars, up over four per cent from 2003. The bulk of these IT expenditures will fall to three categories, says TowerGroup: core processing and trading ($1.69 billion); trading tools, analytics and broker workstations ($926 million); and content, decision support, advice, and planning ($926 million).