Brokerage IT Spending Expected To Grow 1.3% Through 2011
written by Penny Crosman, courtesy of Wall Street Tech
In spite of writedowns of nearly $150 billion in the last three quarters, brokerage IT spending will grow a modest 1.3% from 2008 to 2011, according to analysts at Oliver Wyman/Celent. They expect North American brokerages to spend $30 billion on IT this year and $31.2 billion in 2009. This is a significantly slower pace compared to the 8.5% compound annual growth rate of U.S. brokerage IT spending in the 2004-2007 period.
A report the firm released today found that despite the weakened environment, long-term IT priorities remain. In the front office, brokerage firms continue to focus on achieving best execution for their buy side clients and are investing in pricing analytics and algorithmic program trading tools this year, according to the report. In the back and middle offices, the long-term focus will be on greater integration and consolidation of applications and services and an overall streamlining of processes. Risk analytics and monitoring, compliance, and portfolio valuation are high on the IT list. Another finding of the report is that European brokerages are ramping up IT to a greater extent than Americans: Europe's sell side firms increased their IT spending at a compound annual growth rate of 9.7% in the 2004-2007 timeframe, and the analysts expect these firms to spend $21.3 billion in 2009. They project an overall 5.6% compound annual growth rate in IT spending for European brokerages from 2007 to 2011, with a $19.8 billion spend projected for this year and $21.3 billion for 2009.
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