IT Spending Trends in the US Securities Industry

April 28, 2003

Abstract

Boston, MA, USA April 28, 2003

IT Spending in the US Securities Industry

A new report from Celent predicts that IT spending in the US securities industry will decline in 2003 for the second year running, representing the first two year decline in the industry痴 history.

For the second year in a row, total IT spending in the US securities industry is set to decline. This might not appear exceptional, since markets are broadly down and it has become much more difficult to eke out profits. Budgets across the board are strained, not only in the securities industry. However, the decline in IT spending is dramatic for the simple reason that the securities industry has never before seen a year-on-year decline in its IT spending levels. Individual firms have certainly trimmed budgets in the past. However, at an industry level, IT year-on-year spending has increased continuously since the 1970s. Even in previous downturns, such as the market crash of 1987, or the recession of the early 1990s, IT budgets at an aggregate level continued to increase.

The report outlines IT spending patterns amongst US securities firms and shows the priorities and challenges facing market participants. The report highlights how some of the cuts in spending are impacting day-to-day operations. According to Octavio Marenzi, managing director at Celent, "a number of firms have cut their technology and operations budgets to such an extent, that they are running serious risks in terms of processing trades correctly. In some instances, more complex trades have been badly mishandled in the back office, typically because layoffs have led to the elimination of the staff with the necessary experience to handle these transactions."

A is available online.

of Celent Communications' Retail Securities & Investments and Institutional Securities & Investments research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA April 28, 2003

IT Spending Trends in the  US Securities Industry

Return to report Abstract

 

INTRODUCTION 3
  The Risk of Declining Budgets 3
  Challenging Times 3
US SECURITIES INDUSTRY IT SPENDING 6
  Definition of IT Spending  6
  Servers 10
INTERNAL VS. EXTERNAL IT SPENDING 11
IT SPENDING BY LINE OF BUSINESS  14
  Retail Brokerage 14
  Institutional Brokerage 16
  Asset Managers 17
THE FATE OF KEY IT INITIATIVES 19
  Customer Relationship Management 19
  T+1 20
  Internet 21
CONCLUSIONS 23

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