Financial Firms Budget $365 B For Tech
NU Online News Service, December 15, 1:14 p.m. EST?In 2005, banking, securities and insurance institutions will spend an estimated $365 billion on technology in order to achieve growth, greater operational efficiency and networked services, according to Needham, Mass.-based TowerGroup.
Among the three sectors, the company said, the insurance sector next year will make only a modest increase in its outlay.
The research company identified growth efficiency and networked services as among the top business and technology drivers cutting across all major sectors of the global financial services industry, as part of its series of 2005 Perspectives research reports.
"TowerGroup sees fundamental shifts in the way financial institutions will manage their? IT [information technology] investments in 2005, as technology affects the productivity of over $2 trillion in global operational expense," said Guillermo Kopp, vice president of the TowerGroup Cross-Industry research practice. "Financial institutions will implement process and technology changes in more manageable chunks, and employ business process management and networked services as pivotal elements for strategic transformation."
Mr. Kopp added that it will be increasingly critical for financial institutions to cut across organizational silos and fulfill their customers needs more proactively. "This is something the industry has talked about for years, but has been hard-pressed to implement effectively," he said.
TowerGroup projects overall IT spending in the U.S. insurance industry will remain relatively flat from 2004 to 2005. Next year "will see a slight increase in total IT spending for property and casualty insurance, reflecting a pent-up demand for new technology, while life and annuity will remain flat as insurers work hard to capitalize on existing investments," the researcher said.
TowerGroup is an advisory research and consulting firm focused on the global financial services industry. Further information is available at www.towergroup.com.
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