The Importance of IT in the Financial Industry

Financial services firms spend about $500 billion on information technology, which is more than a fifth of total IT spend, and more than any other industry. Many of the world's computers, networks and storage systems are housed in huge data centers run by banks. The fact is, IT is an essential and integral part of any financial business.

The Status Quo of IT in the Financial Industry

Many banks, unfortunately, have really bad IT systems. They were among the first to adopt IT, and their infrastructure is very outdated, with decades-old mainframes and legacy systems. The industry, however, is advancing fast. There is a lot of product innovation that calls for new systems to be developed. Global presence of financial institutions, merger activity that has picked up pace, and the need to comply with regulations after the recent crisis, all add new layers of complexity to the situation.

Furthermore, trading activities have their own needs. Derivatives, hedging positions, models for financial products and risk management need highly specialized programs that are written specifically for them. New financial products and product variations are being created at breakneck speed, and they need their own programs that need to be developed as quickly.

All this complexity leads to poor data quality. The figures pertaining to the an asset class produced by one department are inconsistent with those of the same asset class produced by a different department using its own programs and computer systems. A stark inconsistency with the potential of causing distrust between department heads.

Such scenarios made it extremely difficult to specify a bank's overall risk before, during, and sometimes even after, the last financial crisis. Following Basel II, a lot of banks created new systems to track their overall exposure and spent a pretty penny doing this. By way of an example, Royal Bank of Scotland's expenditure on Basel II compliance exceeded $100m. Even so, these systems developed for the various banks may not be enough.

Inadequate IT systems are not to blame for the financial crisis, yet they definitely Aggravated it. The industry spent billions on improving the speed and scope of their trading activities to generate more profit, but not nearly enough on risk management.

Where We Come In

Financial Services is where our roots are. Our very first clients were banks, insurance companies, and exchanges for whom we developed software systems with various degrees of size and complexity. Not only do we have unparalleled expertise at developing financial systems, we also understand the business side of the industry extremely well.

We aim to be your partners. We are experienced at developing integrated systems that give you access to the data you need in real time.