This investment is required to pursue new opportunities to improve profitability by expanding into new markets, local sales, geographic areas, and asset classes, while managing this added complexity. More than two-thirds of respondents surveyed about infrastructure spending forecast an increase of between one and six percent in their investment.
Meanwhile, current volatility in global markets is making profitability a challenge, and as a result, customer loyalty is declining. Since neither the buying nor selling side can guarantee profit margins under current market conditions, both parties are investing in IT systems that improve service levels in the hope of a positive impact on customer satisfaction and, ultimately, customer loyalty.
Rik Turner, senior financial services technology analyst at Ovum, comments: "Financial markets face two main challenges in 2014: the difficulty of achieving profitability in a post-financial crisis environment and compliance with the growing number of rules and regulations. This will lead to increased spending on IT infrastructure, as well as a focus on systems to improve customer loyalty."
“Regulatory compliance will continue to be a particularly large area of spending,” Turner says. “The ever-increasing array of rules and regulations demands more investment and is currently consuming up to 40% of IT budgets across financial markets.”
This is supported by Ovum’s ICT Enterprise Insights** – the largest survey of senior IT executives – which reveals that navigating the tsunami of regulation worldwide, particularly in North America and Europe, the two largest trading regions, requires significant investment in IT systems.
