Thecredit
crunchcurrently blighting the financial
services industry and contributing to the onset of global recession
has had
a major impact on IT decision-making within corporates in all
sectors.
Financial services firms are
tightening their belts as a result of the shortage of funds,
which means that banks, building societies and other financial
services businesses have fewer products to offer.
The scarcity of capital is in turn leading businesses outside
the financial sector to rein back their spending, as they
prepare for falling demand from customers tightening their own
belts.
Focus on finance
Banks and the financial services industry as a whole are
heavily dependent on IT. As a result there has been a conscious
decision to continue to invest in IT where it will bring a return
but to cut the cost base associated with it. This means, for
example, less IT recruitment but
existing jobs remain essential for companies to
retain their competitiveness. But new projects, regardless of
their potential benefits, are being shelved. The
cautious response to the use of XML e-commerce standards in the
mortgage industry, from the businesses set to benefit, is a
case in point.
Spend to save
Yet the heavily regulated finance sector must spend money if it
is to adhere to legislation such as
MiFID and
Basel II as well as be able to offer customers services such as
Faster Payments, which have been driven by regulators. The
sector is also being advised to
step up its data security mechanisms following events such as
the rogue trader fraud at French bank
Société Générale.
Many CIOs in the general market believe that
IT spend should continue to help businesses during economic
slowdown. Given that the efficiencies offered by many technologies
offer cost reductions, they can be viewed as an investment rather
than a cost.
IT directors need to be at their innovative best during hard
times as the boardroom demands more for less. Outsourcing is a
popular way to make savings but
cost cutting is not the ideal driver for an outsourcing
strategy.