Wealth management IT spending to hit $28.5bn by 2012 - Datamonitor

Wealth management IT spending to hit $28.5bn by 2012 - Datamonitor

Spending on front-to-back wealth management IT by financial institutions in North America, Europe and Asia Pacific will reach $28.5 billion by 2012, up from $20.5 billion in 2006, according to a report by market analyst Datamonitor.

Datamonitor says this rise in technology spending - a 5.7% compound annual growth rate (CAGR) - is being fuelled by regulation and increased competition in the wealth management market.

The emergence of a wealthy and mass affluent segment is fuelling growth in new services and distribution options, which will require a more sophisticated approach to technology, says the report.

Datamonitor predicts that retail, or universal, banking is the sector that will see the sharpest rise in technology spending on wealth management - about 9.5% CAGR. Retail asset management will continue to be the sector spending most on wealth management but growth will only be around 4.7% CAGR.

The report also suggests that spending on Internet and presence technologies will accelerate, growing by eight per cent CAGR, while spending on core systems will be a sluggish 4.7% CAGR.

Firms are increasingly looking for packaged core systems that include front and middle office tools, such as portfolio management, financial planning and analytical CRM systems.

"Wealth managers, private bankers and retail banks are no longer talking of stand-alone strategies for wealthy individuals," says Jaroslaw Knapik, financial services technology analyst, Datamonitor. "The trend is towards 'integrated financial solutions', revolving around cross-selling banking, savings and investment products wrapped with advice."

Fidelity Investments recently disclosed plans for an integrated wealth management platform utilising technology from Advent, Oracle and Emerging Information Systems.

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