Could financial services IT investment translate into opportunities?

Monday 7 April 2014

IT contractors could do well to focus their efforts in the financial services sector in the near-term, as the industry looks to invest in technology.

The Financial Services Survey by the Confederation of British Industry (CBI) and PwC showed that over the next 12 months, IT will be the top capital investment. This is specifically true for investment management firms, securities trading companies and insurance brokers.

Among investment management firms, the number of businesses expecting to see bigger IT budgets has more than doubled.

The security trading sector will also see IT spend grow at its fastest pace in four years. This is primarily to improve efficiency and to upgrade old infrastructure. Indeed, the CBI and PwC observed that 'replacement' is currently the second biggest reason for investment, usurping cyber security.

Kevin Burrows, financial services leader at PwC, said: "Banks need to adopt bold new strategies as they face challenges around regaining trust, legacy issues, regulation and technology.

"Digital must be at the heart of their business as new entrants such as challenger banks, peer-to-peer lending and crowdfunding all have one thing in common – digital platforms which make the most out of big data and really focus on customer needs."

Among life insurers, systems and apps will be the main investment priority, as a means to grow operations.

However, across the board, a shortage of skilled staff could throw a spanner in the works for IT plans.

This is especially the case when it comes to upgrades and new IT-enabled services, and it is well-known that contractor availability is declining as demand heats up.

Matthew Fell, CBI director for competitive markets, said: "Businesses plan to spend heavily on IT and are scrambling to find new professional staff to meet growth demands."

Mr Burrows also acknowledged that businesses are becoming concerned about the lack of talent. This is despite employment increasing.

"Taking into account long-run trends, the latest survey results suggest that employment in financial & insurance activities should rise to 1.16k by the end of Q2 2014, which would leave it 26k higher than one year earlier," he explained.

Availability of professional staff is the concern of 38 per cent of businesses - the highest level since March 2006 when 39 per cent was recorded.

This could dramatically impede the ability of financial services firms to grow in the future and steps need to be taken to ensure companies can source the talent they need to expand.

Luckily firms are starting to put plans in place to help address the skills shortage. In the securities trader sector, money is being ploughed into training. Indeed, during the first quarter of the year, spending on training staff grew at the fastest pace since 1998 - the third quarter of gains.

This is expected to continue to rise over the coming quarter at a robust pace. However, the investment intentions of businesses have been mixed.

Nevertheless, IT spending is predicted to increase at the fastest pace in four years, in a bid to improve efficiency, capacity and service offerings.

By Victoria McDonnell

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