A new study asserts that Wall St. firms are ready to address one of reps’ most common complaints in recent years: the lack of resources devoted to internal infrastructure, especially technology.
The study, from Boston-based Celent Communications, says that after years of cost cutting in the securities industry, technology spending is expected to increase every year through 2007, from $26 billion this year to nearly $30 billion by 2007. That’s way up from $21 billion in 1999.
Leading the charge is Merrill Lynch, with a budget of $2.7 billion. Merrill is in the process of installing new broker workstations, a five-year project with Thomson Financial that is expected to cost $1 billion.
Following closely behind Merrill on the spending list are: Fidelity, with $2.3 billion, J.P. Morgan Chase with $1.99 billion and Morgan Stanley with $1.96 billion.
“While it might not be a return to the spending nirvana of the late 1990s, 2004 looks to be the year in which wallets open again,” says Sang Lee, manager of Celent’s securities practice. Lee points to the positive stock outlook and pressures in investment banking as the top reasons for the surge.
Surprisingly, “online discount brokerage” Charles Schwab & Co. is expected to spend only about $730 million in the next year, ranking lowest of the 11 firms profiled by Celent. Other 2004 budgets noted in the report include: Smith Barney ($1.68 billion), Goldman Sachs ($1.5 billion), Lehman Brothers ($1.1 billion), UBS ($950 million), CSFB ($920 million) and Bear Stearns ($860 million).