Financial institutional spending on security technology is largely irrational and often misdirected due to a lack of understanding of privacy management issues, says a new report from Meridien Research.
The report, "From Policy to Practice: Privacy Management Solutions", points out that while financial services institutions are spending significantly on security, database enhancements and, in the US, opt-out notice mailings, little is being invested in solutions that actually manage a customer's privacy.
The study predicts that $25 million will be spent this year on core privacy technology worldwide, including hardware, software, and services. This figure is expected to grow to $167 million by 2006.
"Lack of a clear understanding about institutional privacy management issues will create a large amount of irrational or misdirected spending," says Dennis Behrman, analyst at Meridien Research and author of the report. "Very few organisations have committed to the development of a robust, enterprise-wide privacy policy."
Institutions with a greater number of systems and processes will spend more on services to privacy-enhance those systems and processes, primarily in the areas of system integration and business process integration, and less proportionally on privacy-related operational labour and customer service.
The research also shows the largest 500 companies accounting for at least 98 per cent of the market.