NEEDHAM, MA, October 24, 2005 - Following five years of tough financial markets, slashed budgets and regulatory hailstorms, the U.S. securities and
investments industry is finally entrenched in a period of business and technology reinvestment. A series of new research reports from TowerGroup identify the "Top 10" business drivers and technology priorities fueling each of the three U.S. securities industry sectors in 2006: capital markets;
investment management; and retail brokerage.
"In 2006, the major sectors of the U.S. securities and investments industry will be united in their quest for revenue growth and their focus on reinvestment in both business and technology priorities," said Rob Hegarty, managing director of the TowerGroup Securities & Investments practice.
"Key to driving revenue growth will be an added emphasis on the 'care and feeding' of clients, whether institutional or retail. Also expect to see
significant dollars invested in the core technology architectures and tools critical to putting firms out of harm's way when the next wave of reputation risk and regulation hits the financial services markets," he added.
Sector-specific highlights covered in the 2006 TowerGroup research series include:
Securities & Capital Markets:
- The three main business drivers for the securities and capital markets sector in 2006 will be: the search for revenue growth; responding to the changes in financial market structure; and dealing with the growing compliance burden.
- TowerGroup expects IT budgets at U.S. brokerage firms to rise in 2006, for the third consecutive year of growth. However, technology priorities are shifting. Cost-cutting has finally been relegated to the back burner as brokerages move their focus to driving revenue and business investment.
- The mushrooming of the hedge fund sector and continuing activity in the derivatives market will both command significant attention from institutional
brokers in the year to come.
- As the regulatory "stick" begins to lose some of its punch, the investment management industry in 2006 will rally around proactive reputation risk
management - as opposed to a reactive compliance response.
- As the industry looks to maximize revenue while rebuilding client trust, asset management firms will increasingly pursue alternative products, add
nontraditional securities to traditional portfolios, and take their businesses global.
- Accomplishing key business goals in 2006 and beyond will drive asset management firms to make their first large-scale investment in core technology
since the 1998-to-1999 period, when fears of Y2K pushed major replacements of legacy architectures.
Retail Brokerage & Investing:
- While rocked in recent years by regulatory scrutiny and rule-making, 2006 will find astute retail brokerage institutions beginning to transform "cultures of compliance" into brands noted for trusted advice - strongly positioning these firms for years to come.
- Institutions that excel at income generation have plum opportunities in 2006, embodied in several major demographic trends: baby boomers increased
longevity; rising levels of wealth concentration; and the shift of retirement responsibility onto the individual.
- 2006 will see smart retail institutions seeking greater flexibility in core technology architectures, to enable them to respond more quickly and
"personally" to an array of different kinds of investors - all with the aim of retaining customers and increasing advisor productivity.
The three Securities & Investments 2006 trend reports were authored by:
- "U.S. Capital Markets' Top 10 for 2006": Dushyant Shahrawat, Research Area Director of the Securities & Capital Markets service
- "Asset Management's Top 10 for 2006:" Gavin Little-Gill, Research Area Director with Peter Delano, Senior Analyst and Matt Nelson, Analyst
- "Retail Brokerage & Investing's Top 10 for 2006": Matt Bienfang and Matt Schott, both Senior Analysts in the Retail Brokerage & Investing service.