The increasing financial strength of clients is driving investment in the online and mobile delivery segments of the wealth management sector, according to Ovum.
New research from the global analyst indicates that IT spending growth in the global wealth management industry will accelerate in 2014 to 4.0 per cent, up from 3.1 per cent in 2013, before peaking in 2015 at 4.5 per cent.
Wealth managers will also prioritise user experience in order to improve client trust in the next year. This will require increasing sales and servicing effectiveness, which will drive further front-office IT investments. The focus on controlling operational budgets will remain strong, but wealth managers will increase IT spending on new initiatives. As a result, IT spending is expected to grow in Europe by 2.1 per cent by the end of 2013 and accelerate to 2.9 per cent in 2014. As their economies strengthen, IT spending in Asia-Pacific markets is expected to grow by 3.2 per cent in 2013 and 3.9 per cent in 2014.
“IT is under the same pressure as other parts of the business in that it needs to control costs while funding investments to meet regulatory and strategic requirements,” says Jaroslaw Knapik, senior analyst, financial services technology, Ovum. “This will lead to low-cost, digital channels and back-office transformation projects.”
This is supported by Ovum’s ICT Enterprise Insights – the largest survey of senior IT executives ever conducted – which reveals that reducing operating costs and supporting revenue growth are the most important objectives impacting IT investment strategy in 2013. It also states that any IT project will be cautiously evaluated on its return on investment (ROI) and ongoing maintenance costs before approval.
Over 50 per cent of respondents to the ICT Enterprise Insights survey indicate that their IT budgets are set to increase by six per cent or more between 2013 and 2014, driving spending to GBP20bn by 2017. This is a significant shift from the previous year, when most increased by between one and five per cent.
Knapik says: “Wealth managers will devote effort to revenue growth, rather than reducing costs. This will drive further front-office investments, in physical and digital channels, as well as product development.”
