Financial market institutions are transforming core processes with new ICT tools

Kable’s survey finds that financial market institutions plan to significantly increase their ICT budgets over the course of 2014 to ensure innovation, automation, and reuse of their core functional processes as well as to meet growing business demands. The survey of 155 financial market institutions shows that 50% of respondents are planning to increase their ICT budgets in 2014, compared to 32% in 2013, indicating a positive outlook for ICT providers. Kable’s data also highlights that financial market institutions are keen to invest in their core ICT systems in 2014, planning to spend 66% of their total ICT budgets on hardware, software and IT services combined.

The survey highlights that 90% and 77% of financial market institutions are currently investing in enterprise applications and business intelligence solutions respectively, in order to improve the efficiency of their business processes, enhance decision making and achieve differentiation. On the other hand, driven by advantages such as improved scalability, flexibility, lower total cost of ownership and ease of management, 79% of financial market institutions are currently using cloud computing solutions in their organisations. This trend is likely to continue in the next two years, as 80% of financial institutions plan to invest in cloud computing solutions, providing decent opportunities for hybrid based cloud solution providers.

However, greater investments in these areas of ICT will mean cuts in other areas. Staff costs account for the largest expenditure, and while universities have been reluctant to outsource in the past, momentum is growing. Hardware costs are the second largest, and with often tech-savvy students and staff starting to bring multiple devices onto campus, BYOD (Bring Your Own Device) will enable the streamlining of PC clusters in universities. This will further underline the importance of investment in flexible access and faster, more resilient networks.

“ICT investments in IT infrastructure areas such as payment clearing systems and end-user systems are gaining traction among financial market institutions,” says Tim Gower, Research Director at Kable. “Rapid advancements in technology and changing customer requirements are encouraging financial market institutions to upgrade their core infrastructure.” Meanwhile, the dominant factors that are considered while selecting ICT vendors include specific functionality expertise and depth, financial stability and price. This signifies that vendors who have a robust financial position, offer aggressive pricing, and who can understand the nuances of operating in the financial markets will be in a better position to make inroads in this sector.