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Banks Leave Finance IT Exposed and Underfunded


GFT is a leading international provider of innovative banking technology. With over 20 years of experience, GFT is among the world's leading IT service providers in the financial services sector. The company combines established technology experience with a wide range of industry expertise, in order to develop, implement and maintain customised IT solutions. Recent research from this knowledgeable company indicates that some banks could be at risk of leaving Finance IT vulnerable, impacting negatively on their services.


The GFT findings revealed that banks are at risk of underfunding the implementation of regulatory changes in Finance IT and that staffing levels have fallen back, leaving the sector exposed. The research findings, supported by data drawn from TABB Group, the strategic advisory and research firm focused solely on capital markets, expect Finance IT sell-side spending to increase to nearly $1bn ($999.22) by 2012, up just 5 per cent after a 13 per cent drop since 2007. The report highlighted the difference in Finance IT budgets between top and second tier banks as a proportion of revenues, with some second tier banks planning to spend less than half a million dollars per annum, whilst one top tier institution is budgeting $100m over a multi-year programme. The research found that Finance IT teams in London


and New York are increasingly focused on the impact of regulatory changes and firm-wide risk management practices, causing a shift in focus from the front office to cost centres, as banks work to attract and divert talent to reorganising the back office. Staffing levels are down 10 per cent however, from 2008 highs back to 2000 levels, leaving teams struggling to implement. As one respondent from a top tier bank commented "Finding the right people within the budget. That's the biggest thicket". Graham Underwood, Managing Director of GFT


UK, commented: "Finance IT touches the whole business and financial institutions cannot afford to underfund it. In addition, stated objectives are not aligned with budgets overall, in that the planned funding does not correspond with ambition". He continued, "A more strategic approach is needed to ensure that spending is bank-wide and meaningful. With new regulation to contend with, some banks are clearly not budgeting enough. As the financial sector works its way out of the crisis, regulation has become an even stronger business driver. Banks which understand this will thrive by investing in the back office to improve systems and processes to increase productivity". The ambitions that banks have, beyond the need to meet regulatory requirements, involve measures to save significant costs by rationalising IT systems and processes. The research also identified that a


fi MONTHLY MARCH 2011


key part of meeting regulatory requirements will be to reengineer processes, technology and resource deployment. 87 per cent of respondents mentioned process improvement as a priority for Finance IT (over having the latest technology) and a need to be more agile. To this end, 29 per cent of respondents are already working on improving deployment processes and 25 per cent on refining development processes. This rationalisation is creating demand for process


specialists, but reengineering business processes needs a well put together and managed team to intelligently resolve the problem. Graham concludes: "Financial institutions will have to be more adept at efficiently managing external, project-specific resources, rather than just throwing bodies at the problem". The GFT Group was founded in 1987 by Ulrich Dietz.


He is now CEO of the Group which, in 2009, achieved revenues of around 217 million EUR. With more than 1,200 employees, it has locations in Germany, UK, US, Spain, Brazil, Switzerland and France. GFT shares are listed on the Frankfurt Stock Exchange (Prime Standard: WKN 580 060, GEX). fi


Graham Underwood


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