Is the future of IT in the bank?
By Jenny McLeod, G2G3
Over the past few weeks, many analysts have had their worst recession fears confirmed. Bank of America purchased Merrill Lynch, Lehman Brothers declared bankruptcy and AIG have been scrambling to secure tens of billions of dollars in emergency capital. It is hasn't been a great month for the financial sector.
Worryingly, financial service institutions have traditionally been the biggest drivers for the IT industry – major investment banks and insurance companies spend hundreds of billions of pounds annually to maintain and upgrade IT networks. This dependency has left many people wondering - what will happen to the IT industry if the financial sector goes bust?
Fortunately, things are not as bad as they may seem. Gartner Analyst Ken McGee says that major financial institutions will continue to demand IT services and products as they are crucial in order to stay competitive and keep sensitive data secure. Lehman Brothers continued to invest heavily in IT even though it was surging towards bankruptcy. So, whilst spending will probably slow, it may not experience negative growth. On top of this, departments at major financial firms will have known about the impending downturn for a considerable amount of time. If they have budgeted accordingly then drastic cuts should be avoided.
And what about the future of IT – is it in the bank? There will be a host of new legislation in the aftermath of this crisis, which will hopefully open up new channels for the importance of IT. This could be particularly true for firms that help companies comply with reporting requirements. Dr. Paul Plishuk, president of Information Gatekeepers, Inc. (IGI) points out that the increasing number of mergers and acquisitions will also boost the market for firms that specialize in integrating networks – consider the Bank of America and Merrill Lynch case.
The troubles within the financial sector will have far reaching consequences. Let's hope that the IT industry can utilize its position in a way that secures its future.
Over the past few weeks, many analysts have had their worst recession fears confirmed. Bank of America purchased Merrill Lynch, Lehman Brothers declared bankruptcy and AIG have been scrambling to secure tens of billions of dollars in emergency capital. It is hasn't been a great month for the financial sector.
Worryingly, financial service institutions have traditionally been the biggest drivers for the IT industry – major investment banks and insurance companies spend hundreds of billions of pounds annually to maintain and upgrade IT networks. This dependency has left many people wondering - what will happen to the IT industry if the financial sector goes bust?
Fortunately, things are not as bad as they may seem. Gartner Analyst Ken McGee says that major financial institutions will continue to demand IT services and products as they are crucial in order to stay competitive and keep sensitive data secure. Lehman Brothers continued to invest heavily in IT even though it was surging towards bankruptcy. So, whilst spending will probably slow, it may not experience negative growth. On top of this, departments at major financial firms will have known about the impending downturn for a considerable amount of time. If they have budgeted accordingly then drastic cuts should be avoided.
And what about the future of IT – is it in the bank? There will be a host of new legislation in the aftermath of this crisis, which will hopefully open up new channels for the importance of IT. This could be particularly true for firms that help companies comply with reporting requirements. Dr. Paul Plishuk, president of Information Gatekeepers, Inc. (IGI) points out that the increasing number of mergers and acquisitions will also boost the market for firms that specialize in integrating networks – consider the Bank of America and Merrill Lynch case.
The troubles within the financial sector will have far reaching consequences. Let's hope that the IT industry can utilize its position in a way that secures its future.
posted by G2G3 Blog at
10:21
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