Financial services IT spending spree this year?

This year is likely to be a big spending year for financial services organisations looking to boost their IT.

According to researchers Datamonitor, IT budgets have increased by an average of 11 per cent in the trading/brokerage, fund management, investments and securities, and hedge funds sectors during 2007.

Datamonitor financial services technology team analyst, Amit Shah, said: "The drivers are the usual suspects - cost cutting and increasing revenues. However, on top of that, a lot of financial institutions are looking to become more customer-centric enterprises. Over 40 per cent of our sample estimated a top IT priority was better customer satisfaction through cross-selling financial products."

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Increased competition and consolidation in the sector was the key factor in focusing on customer relationships, Shah pointed out.

Alongside competition for customers is the impending regulatory changes to the sector. According to Shah, the National Markets System and the Markets in Financial Instruments Directive (MiFID) will require financial institutions to review their IT infrastructures over the next 12 months.

He said: "At present only a handful of firms are fully utilising the capabilities of electronic trading. However, with upcoming regulations [changes], which advocate the need for best execution, there will be strong uptake of electronic trading throughout 2007."

The analyst surveyed 100 financial companies across Benelux, France, Germany, Switzerland, the UK and the US.