Following five years of tough financial markets, slashed budgets and regulatory hailstorms, the U.S. securities and investments industry is finally entrenched in a period of business and technology reinvestment.
A series of new research reports from research and consulting firm TowerGroup identify the “Top 10” business drivers and technology priorities fueling each of the three U.S. securities industry sectors in 2006: capital markets; investment management; and retail brokerage.
“In 2006, the major sectors of the U.S. securities and investments industry will be united in their quest for revenue growth and their focus on reinvestment in both business and technology priorities,” said Rob Hegarty, managing director of the TowerGroup Securities & Investments practice, in a release.
“Key to driving revenue growth will be an added emphasis on the ‘care and feeding’ of clients, whether institutional or retail. Also expect to see significant dollars invested in the core technology architectures and tools critical to putting firms out of harm’s way when the next wave of reputation risk and regulation hits the financial services markets,” he added.
According to TowerGroup, the three main business drivers for the securities and capital markets sector in 2006 will be: the search for revenue growth; responding to the changes in financial market structure; and dealing with the growing compliance burden.
TowerGroup expects IT budgets at U.S. brokerage firms to rise in 2006, for the third consecutive year of growth. However, technology priorities are shifting. Cost-cutting has finally been relegated to the back burner as brokerages move their focus to driving revenue and business investment.
As for retail brokerages, TowerGroup says 2006 will see smart retail institutions seeking greater flexibility in core technology architectures, to enable them to respond more quickly and “personally” to different kinds of investors.