Wealth Mgmt Industry IT Spend To Top $32 Bn

Global spending on IT by the wealth management industry will top $32 billion by 2015, a growth rate of 6.5 per cent over a five year period, predicts Ovum in a new forecast.

The independent technology analyst finds that the ramping up of technology spend by the sector will be driven by a return to better days for the industry, as the number of wealthy consumers looking for opportunities to invest their money slowly increases.

Ovum senior analyst Jaroslaw Knapik commented: “The recession had a big impact on the wealth management industry and it was one of the sectors that bore the brunt of the fall-out, resulting in growth in tech spend slowing considerably.”

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“With recovery now under way, the outlook for IT investment is much more positive. Strong growth in the emerging markets, a need to invest in channels such as internet services, and compliance requirements of new regulations such as Basel III, are all fuelling global growth in technology investment.”

Globally, all channels will see growth but it is in internet services that it will be particularly strong. The high net worth banking and financial planning sectors of the global wealth management industry will increase spending in this area by 7.6 per cent from the beginning of 2011 to the end of 2015. Meanwhile, in the retail brokerage sector growth will be 6.7 per cent for the same period, and in retail asset management, 7.6 per cent.

Knapik commented: “The need to create websites and applications that allow customers and financial advisers access to company websites via mobile devices such as smartphones and tablets will drive some of this growth in internet spend. Much of the rest will come from upgrading online services with personal financial management tools and closer integration of the online channel with middle and back-office technology such as product origination, customer information, or investment and portfolio management systems.”

In the UK and Ireland, Ovum’s forecast shows that there will be healthy growth in IT spend that is slightly above the global figure. The region will see growth of 6.6 per cent over a five-year period, to reach $2.3 billion in 2015. In the US growth will be 6 per cent for the same period, to hit just over $13 billion.

While the amount of money spent on IT will be greater in the developed world, the emerging markets are set for explosive growth. Wealth management IT spend in Eastern Europe will grow by 17.8 per cent from the beginning of 2011 to the end of 2015, as significantly more IT investment will be made, as the industry takes off in the region. Meanwhile, the emerging economies in Asia-Pacific will also see strong growth of 12.8 per cent for the same period.