Wall Street Firms Set to Increase IT Spend Through 2011 on Transformation Initiatives

A new survey of nearly 250 business and IT Wall Street professionals reveals that almost one-half expect 20-30% of their technology budget to be allocated for transformational initiatives in 2010 and 2011. The Wall Street professionals polled in the survey shared the view that the most likely increases in IT investments for analytics are expected to be risk, compliance and trading.

The research from Securities Industry and Financial Markets Association (SIFMA) and IBM has found a greater focus on the development of systemic risk strategies. Of all regulatory activities, systemic risk was chosen by 55% of respondents to be the largest driver of IT investments. Building on that trend, risk analytics for compliance was ranked as the top analytics investment opportunity (37 percent) beating out categories such as analytics for client segmentation (21 percent) and external fraud (13 percent). Over 90 percent of survey respondents expect to increase their investment in analytics over the course of the next year.

While economic uncertainty still remains high, the new survey shows that concerns about the economy are waning from 2009. For the first time since the 2008 financial collapse, firms are revisiting the use of IT to promote organizational sustainability. Key priorities include innovating processes around trading, portfolio management and risk management. Surprisingly, client relationship management ranked last out of 17 categories with only 2 percent of participants selecting that option.

Despite the positive technology investment outlook, Wall Street professionals cite lack of IT staff and high implementation costs as the biggest inhibitors for technology implementation - which remains consistent with findings obtained in 2009.

To overcome some of these challenges, the industry is showing a larger appetite for disruptive technologies such as cloud computing (61 percent) to force business model change.

Other key findings from the survey include:

-- 90 percent of participants expect to outsource one or more of their processes

-- Firms are most likely to outsource compliance reporting and analytics for risk

-- Behind cloud computing, mobile technologies are expected to force significant business and operating model changes

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