In a new, post-recession world marked by more stringent regulation, lower returns, and hyper-competition, financial services is leaning hard on information technology to run leaner, as well as smarter in terms of ability to analyze what's around the corner.
In a recent editorial, Francesco Guerrera of the Financial Times says the financial services and banking sector are accelerating their adoption of smarter information technology practices and technologies to stay ahead of the pack:
- JPMorgan Chase says it is in the midst of a system consolidation (10 down to 2), through which it expects to save about $300 million and redeploy up to 3,000 jobs.
- At Golden Slacks Goldman Sachs, Guerrera reports, IT employees now comprise nearly a third of the bank’s staff -- double the rate of a decade ago.
There's a lot of work to be done before IT really begins to click for many financial services companies, however. As Guerrera points out, many of the financial behemoths are the product of mega-mergers, and there is a lot of integration work left to be done. "JPMorgan, for example, puts the cost of its forex integration at half a billion dollars."
We may also see an acceleration of private cloud development and service oriented architecture practices as banks work feverishly to patch all the pieces together in a more efficient way.