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Securities industry IT spending to soar

06 November 2000  |  2055 views  |  0 keyboard mac old

The US securities industry continues to top the financial services IT spending league, according to a study released by Computer Sciences Corporation and the TowerGroup.

The study forecasts that the US securities industry will spend about $135 billion between 1999 and 2002 on information technology - and that 40% of this overall spend will be accounted for by the five largest players.

Internal or proprietary development still dominates overall IT spending in the securities industry - a reflection of industry concentration and a relatively underdeveloped vendor community, states the report. However, the researchers predict a big role for middleware in the integration of legacy systems with newer Web-based technologies and delivery channels. "The two biggest trends in middleware use will be a greater adoption of vendor-based components and the embedding of traditional middleware within core systems," states the report.

Indeed, much of growth in IT spending within the securities industry is occurring in front-office activities that directly touch the customer. This would include industry efforts to provide an Internet front-end to enable customers to access accounts and initiate a trade.

The research forecasts that Internet technology-related spending within the US securities industry will account for more than one-quarter of all spending by 2002 - up from just three per cent in 1996.

The findings are part of a larger CSC/TowerGroup study, which was conducted to monitor trends in the financial services industry resulting from the Graham-Leach-Bliley Financial Modernization Act (HR10) which breaks down the barriers between commercial and investment banking.

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