After the credit crunch and numerous regulatory summits, the financial services sector has a new focus and is renewing IT resources, says Helen Beckett.
Investment banking: Integration is key
The capital markets have embarked on a hiring spree in the past year that has seen the 30% of staff, shed during the credit crunch, rehired. Compliance effort is sucking up a lot of the renewed resource while the ‘mobilisation ‘of apps for portable devices is another focus for development jobs and security staff.
“The ‘consumerisation’ of applications - making them accessible for the iPhone or iPad, potentially from the cloud, is one of the hottest topics around”, reckons Tom Millar, CEO of ITC Global Security. However there is a lot of heavy-duty work to do to lock them down for this security-conscious sector.
But the unpalatable fact remains that there is less client money around than pre credit crunch - grinding out more efficiency is the unrelenting task of the IT department. Systems integration and standardisation are two preferred methods of cutting out the fat.
Banks have to exchange data with multiple third parties and in the past, writing custom software for a multitude of applications and protocols was a pricey way of life. Now banks are keener to streamline by rewriting and standardising processes.
Another way of cranking up efficiency is to improve the performance of the network and infrastructure. “Network performance is measured by the microsecond in this world and lost seconds can cost billions of pounds”, confirms Chris Pickles, head of marketing, financial markets & wholesale banking at BT.
A virtuous triangle governs the activities of IT staff in investment banks: customer service, revenue and profits and reducing cost. If a technology person can keep all three in mind when coding, integrating software or managing projects, then they’ll be a prized asset.
Retail banking: Customer is king
More than ever before the focus is on the client relationship, specifically “how to keep the good customers” explains Pickles. This is being done by gaining a better understanding of customer behaviour though better business intelligence applications and offering improved service levels.
And, whether in the branch or on the web, retail banks are endeavouring to get closer to their customers ways that usually involve an element of IT. “It might be a better-designed branch that offers expert advice through videoconferencing service, or a top notch internet service”, says Pickles.
Videoconferencing is being offered in braches and ultimately these will be delivered to the home PC. Network suppliers such as Cisco are working on home conferencing, although these will always be susceptible to quality of service issues.
On the Internet, banks are beefing up their security in line with spiralling levels of cyber crime that have been documented in recent surveys. Customers are stepping away if they perceive bank’s security provisions to be inadequate, and news of a breach can cause reputational havoc.
“There’s a pull to understand the technology for any technical professional but if you want to progress, the most important skill set is to be customer-focused yourself. The standard techie response of ‘show me the specification’ will not do”, advises Pickles
Insurance industry: Compliance push
Insurance is a more conservative culture than the high-octane, champagne-fuelled world of investment banking. This sector is picky and prefers to hire people it knows - with previous experience in insurance. However the current dash for compliance may mean it opens its doors to IT pros who have picked up solid compliance experience elsewhere.
The International Underwriting Association (IUA) has indicated that up to 40% of the Solvency II implementation costs would be technology-related. Lloyd's reported a £51M spend on Solvency II related IT this year alone for the London market
With the deadline of 2012 on the horizon, the next two years will see vast amounts of resources thrown at compliance projects, which are taking predominance over any other IT initiative. The C word is dominating conversations as insurers gear up to comply with Solvency II regulations.
“Skill sets in demand are data management, business process re-engineering and business analysis”, advises Rob Stavrou, director of consultancy, Northdoor. Certain product skills sets are rising to the top too. Lloyds of London named Sharepoint as its preferred tool, which may explain the big demand for these skills.
IT budget facts and figures
- 4.5% - Increase in IT spend predicted for 2011. This compares favourably to the 0.3 % in 2010 and the 4.5% decline in 2009 (Source: Ovum)
- 2.9% - Growth in spend on IT by financial services in 2010 (Source: Celent)
- 4.9% - Growth in spend on IT by financial services predicted for 2012 (Source: Celent)
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