Over 90% of Wall Street firms expect to increase spending on analytics over the next year, with risk and compliance the areas most likely to see greater investment, according to a survey from IBM and Sifma.
The poll of nearly 250 business and IT Wall Street professionals shows firms are increasing their focus on systemic risk strategies as they prepare to meet the government's increased transparency demands.
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, at 37%, beating out categories such as analytics for client segmentation, on 21% and external fraud, 13%.
IBM says concerns about the economy are beginning to wane as for the first time since the 2008 financial collapse, prompting firms to revisit the use of IT to promote organisational sustainability.
Key priorities include innovating processes around trading, portfolio management and risk management but, surprisingly, client relationship management ranked last out of 17 categories with backing from only two per cent. Almost half of respondents expect 20% to 30% of their technology budget to be allocated for 'transformational initiatives' in 2010 and 2011.
Meanwhile, 90% of participants expect to outsource one or more of their processes this year with compliance reporting and analytics for risk the most likely fields.
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, consistent with findings for last year. To overcome some of these challenges, the industry is showing a larger appetite for disruptive technologies such as cloud computing - 61% - to force business model change.
Shanker Ramamurthy, GM, IBM Financial Services Sector, says: "Coming out of the largest financial crisis in modern day history, there has never been a more important time for firms to capitalise on technology investments to make sense of the data and gain a more sophisticated understanding of risks. The road to recovery is built on infusing intelligence across operations, streamlining costs and getting back to basics so that firms once again focus on innovation and growth."
Tom Price, MD, Sifma, adds: "Having the right technology in place is more essential than ever in efforts to monitor risk across firms and ensure regulators can identify and address potential problems before they escalate."