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IT Efficiency Key For UK Financial Services

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Banks need to get more for their money, as their IT budgets could remain flat for up to three years

Cutting costs and preparing IT systems for the impact of tighter financial regulations are just some of the challenges facing financial services IT departments according to research.

In a statement released this week, telecoms company Colt said a survey of investments banks, stock exchanges and market data providers had revealed that improving the efficiency of IT systems is a key priority for financial services companies this year.

”The banking sector is clearly at a crossroads, with fundamental changes likely in the next year,” said Terry Quigley, head of COLT’s Financial Services team. “Banks need to have a flexible and low cost infrastructure in place to address market changes, and technologies such as virtualisation and utility computing can have a major impact in making this happen.”

When asked about the IT priorities for their IT department in 2009, 100 percent of respondents cited IT efficiency as a goal. Cutting costs, as well as security and regulatory compliance were also cited as increasingly important, according to Colt.

To help improve the efficiency of IT systems, financial services companies are increasingly looking at data centre consolidation and virtualisation technology according to the survey. Utility and cloud computing were also cited as important objectives for the next two years.

However when it comes to implementing new technology, most IT departments will have to make do with flat or even reduced IT budgets according to Colt’s research. Around 42 percent of the financial services companies surveyed said budgets would remain the same as 2008. Looking ahead, around two thirds of respondents expected IT budgets to remain flat through 2009 and 2010.

“In the current climate, the fact that almost half of banks have kept IT budgets static is a reflection of the importance of technology in capital markets,” Chris Skinner, chairman of The Financial Services Club. “With a wave of new regulations likely to be deployed from the G20, along with individual countries and regions making banks and clearing systems be more compliant with requirements for transparency, now is the time to ensure infrastructures, systems and services are capable for fast cycle adaptation to these forces of change.”