The IT industry is set to receive a significant windfall from the wealth management sector this year as the latter prepares to ramp up its technology spend, a report by global consulting firm Celent reveals.
Budgets allocated to wealth management technology spending are expected to rise by 5 per cent by the end of 2010 to reach $3.7 billion, said the report entitled "Wealth Management Business and IT Priorities for 2010: A Global Perspective".
With the market crisis pushing companies to seek alternative ways to reach their clients from all over the world, technology, no doubt, plays a key role in providing quality and up-to-date service.
"Projects that were put on hold in 2008-2009 are likely to restart in 2010," said Arin Ray, an analyst at Celent and co-author of the study. "Firms will focus on reducing costs and augmenting advisor productivity through the use of technology, carefully evaluating the return on investment before making any investment."
Besides targeting the high net worth and ultra-high net worth demographic, wealth management firms are also now looking to tap the growing mass market and mass affluent segments, particularly in the Asian region. In a separate study conducted in 2009 by Forbes Magazine, countries such as China and India emerged as formidable economies that could threaten the pre-eminence of the US or the UK.
Celent found that wealth management IT spending activities went up 5 per cent from 2008 to $0.63 billion in 2009 and noted that while this increase may not seem significant for now, it is an indication of strength for the region - particularly at a time the rest of the world has suffered declines.
Celent found Asia to present the most robust opportunities for wealth managers, expanding at a rate of between 12 and 15 per cent annually from 2005 to 2007. Going forward, the firm said it expects Asian wealth management IT spending activity to rise at an annual rate of 8 per cent starting in 2010.
Celent interviewed 47 financial institutions from Europe, North America, and Asia for the study.