Overall technology spending in the American financial services sector is now declining for the first time in US history and will slow by 3.7% between 2008 and 2009, latest market assessments have found.
Widespread company restructuring and consolidation in the financial services, as well as the volatility of the stock and money markets have taken their toll and research carried out by TowerGroup shows a majority of companies plan to scrap or delay until 2010 projects that call for new investments.
After several years of consistent growth of between 4% and 6% cost cutting in the sector may be so deep this year that it permanently cripples IT structures and jeopardises business lines, the research house said.
The group does expect spending to recover and show a compound annual growth rate of 5.8% between 2009 and 2012.
It also predicts that replacement IT spending to increase by over 20% in 2009, as institutions consolidate redundant infrastructures and update legacy systems.
