According to the US’s TowerGroup, financial services companies will spend $362bn on technology investments in 2005. Guillermo Kopp, vice-president of the TowerGroup cross-industry research practice, said that this year the industry had the chance to cut across silos and focus on the customer.
“This is something the industry has talked about for years, but has been hard-pressed to implement effectively,” Mr Kopp added.
Whereas technology spending dropped in the global securities industry between 2001 and 2003 at a compound annual growth rate (CAGR) of negative -7%, TowerGroup foresees IT spending rising at a CAGR of 4% between now and 2008 in this area.
In banking, the retail sector will lead the increased spending, with the wholesale sector starting to pick up the pace.
“As we head into 2005, TowerGroup believes that bankers will greet an environment supportive of continued growth in retail-oriented lines of business, while also witnessing a slow but broad-based recovery on the wholesale banking front,” said Jim Eckenrode, vice-president of the TowerGroup banking and payments practice.
For full 2005 predictions on technology from The Banker, see page 64.
