Thursday, December 13, 2007

IT Financial Sector Spending: The Future is Bright

Brief commentary in the recent Cisco (CSCO) conference call held in early November touched on the possibility of slowing IT spending in the financial sector looking into 2008. Even raising the specter of a reduction in financial IT spending caused the network equipment maker’s stock to slump immediately below $30.

Fortunately for Cisco the reality of financial sector IT spending appears to be much brighter. A survey by Wall Street & Technology and associated firms show that spending on equipment and labor will increase moving forward into 2008. Within the securities industry, nearly half of sell-side firms expect to increase their IT budgets from 11 to 30 percent in 2008. A similar situation in exists at buy side firms with more than a third planning to increase spending by 11 to 30 percent.

The banking sector demonstrates similar results with mid-sized banks leading the sector in spending increases. A good portion of spending by banks is driven by regulatory and compliance requirements while enhancing infrastructure maintenance.

Security still remains near the top of the list across the financial industry in terms of being an area where spending will continue to increase significantly. However there are bright spots in the report for core equipment manufacturers; data center infrastructure will be the focus of the majority of 2008 IT dollars at 82 percent of brokerage firms.

The survey shows an overall increase of more than 10% across the financial sector, rather than any type of decrease in spending. Certainly the picture is brighter than projected by many pundits watching the recent credit turmoil; maybe they need to go buy some shades to improve their vision during the sunny days ahead.

2008 IT Budgets Up More Than 10% for Financial Services Firms;?articleID=204204039