Defining the market.

Global enterprise technology spending is projected to increase at a compound annual rate of 2.3% and reach approximately $1.33 trillion in 2009. Technology spending in financial services represents approximately 30% of this total global growth, climbing from $35 billion in 1990 to $62 billion during the 1990s to $493 billion in 2007 (2008 - Gartner Report). Looking beyond 2009, research firm IDC expects IT spending to make a full recovery from any near-term temporary downturn by the end of its current forecast period, with growth rates approaching 6.0% in 2012 (November 12, 2008 - IDC).

The financial services market is the lead adopter and purchaser of newer technologies that are later deployed in all other sectors of the economy. Initiatives adopted by financial services companies have further application across every industry, representing a much larger market opportunity for technology providers.

The long term demand for new technologies by financial institutions is well established. Nevertheless, we believe that the recent turmoil in the financial markets will dramatically change the mix of FinTech spending, with a higher proportion focused on regulatory and enhanced transparency driven areas.

The financial services industry segment is an early and leading consumer of technologies ranging from:

• Systems infrastructure (network, servers, storage, wireless, etc.)
• Software infrastructure (middleware, database, security, web 2.0, mobility etc.)
• Applications (ERP, software as a service (SaaS), business specific applications, information management, search, compliance and risk management)
• Business services (BPO, IT consulting, managed services, telecom services, etc.)

Growth trends.

The financial services space represents the single largest amount of technology spend within any sector of the economy. Spend is driven by trends for transparency and regulation that require the replacement of certain large legacy systems and business processes to meet those demands on time or at all. Capital budgets in most of this sector are mandatory. Therefore, spend is very stable in today's unstable business climate. As other sectors such as healthcare experience decline in investment due to unfavorable market conditions, financial services will see continued growth due to regulation with immovable deadlines.