IT spending on rise at financial services firms, survey shows

In an effort to connect better with customers, financial services companies of all stripes are spending more on information technology, according to one analyst.
APR 02, 2007
By  Bloomberg
NEW YORK — In an effort to connect better with customers, financial services companies of all stripes are spending more on information technology, according to one analyst. Of 20 trading and brokerage companies recently surveyed in Europe and the United States, 35% said they planned to spend more on information technology this year, according to a survey released last Thursday from Datamonitor PLC of London. That represents a dramatic increase over the level in 2006, when just 5% said they anticipated increased spending, according to the survey. “Firms are looking to listen to the retail customer,” said Amit Shah, an analyst at Datamonitor. “They’re using technology for better customer satisfaction.” Trading and brokerage companies are investing in information and risk management systems to manage clients and their relationships with those clients, Mr. Shah said. Companies are trying to “understand what customers want and are being more innovative,” he said. Datamonitor’s survey, which is published every six months, tracks 100 companies in various sectors of the financial services industry. Along with trading and brokerage companies, those sectors include investment banks, investment and securities services firms, fund management companies, and hedge funds. The companies range in size. The smallest has about $5 million in revenue, and the largest generates more than $1 billion in sales. Of the firms surveyed, 60 are based in Europe, and 40 are based in the United States. No trading and brokerage companies surveyed this year said they planned to cut spending in technology. That is a clear shift from a year earlier, when 5% of such companies said they planned to reduce such spending. And fewer companies planned to stand pat when it came to investing in their technology and risk management systems, according to the survey. This year, 65% of the trading and brokerage companies said they would neither increase nor decrease their spending on information technology. In 2006, 75% of the companies in the survey from that sector said they would make no changes. Although First Clearing Correspondent Services plans to spend more on technology this year, the share of its annual budget that is allocated toward that will remain unchanged, said Atul Kamra, president of the Richmond, Va.-based company. “We are applying [information technology] capabilities in three areas,” he said. The first is around “work flow,” which could include giving branch offices rather than the home office in a brokerage system a better ability to do a transaction, Mr. Kamra said. The second is “content management,” he said. That could include using “prompts” for financial advisers to have more meaningful contact with their clients, Mr. Kamra said. A system of prompts simply acts to remind the adviser about a range of client information, from the personal, such as a grandchild’s birthday, to the range of assets a client feels comfortable having in an account, he said. Finally, First Clearing is using information technology “to extend the whole process,” with the intention of building a business relationship by giving its clients “what they want and what they ask for,” Mr. Kamra said. First Clearing is a division of Wachovia Corp. of Charlotte, N.C. It has 125 broker-dealers as clients and $767 billion in proprietary and non-proprietary assets.

Latest News

Farther adds $120M firm with science-backed approach to wealth management
Farther adds $120M firm with science-backed approach to wealth management

The latest addition to the tech-driven firm combines wellness and finances.

Cutting back on fun: a third of Americans plan to reduce spending on vices
Cutting back on fun: a third of Americans plan to reduce spending on vices

Your clients are likely to be spending on vices, depending on their generation.

Gold continues to shine, but will jobs data change that?
Gold continues to shine, but will jobs data change that?

Traders are awaiting the latest snapshot of US economic strength.

Veritas could be about to snap up one of Wall Street’s oldest names
Veritas could be about to snap up one of Wall Street’s oldest names

Private equity firm reportedly in talks to make an acquisition.

Trump wants to scrap one of private equities' tax breaks, again
Trump wants to scrap one of private equities' tax breaks, again

Exemption enjoyed by PE and VC firms was under fire in his first term too.

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.