A "single view of the customer" has become essential in the financial services sector, rather than a nice-to-have feature, as the industry continues to reel from the recent spate of mergers and near financial disasters.
This is according to BMI-TechKnowledge senior analyst Miranda van Rensburg, who addressed the ICL/Sun financial services breakfast in Cape Town yesterday.
Van Rensburg says IT systems are playing an increasingly important role in the financial services sector as it becomes "the ultimate measure of customer relationship management".
Industry challenges include the fall in the number of banking licences, the merger of central depositories such as Strate and UNEXcor, the convergence between insurers and banks, consolidation of asset management companies, the merger of smaller broking firms in order to meet new regulations, the ability of the financial exchanges to trade each other`s products and the backlogs in pension fund allocation.
Furthermore, this year will prove highly challenging for IT systems in the financial services sector as a number of acts passed by Parliament will come into effect. These include the implementation of capital gains tax, the Financial Advisors and Intermediary Services Act and the Electronic Communications and Transactions Act.
Then there is also legislation relating to money laundering, to the clean pricing of unit trusts that will eliminate difference in the buy and sell prices, and to public access to information.
Van Rensburg says financial services companies have slowed their budgeted IT expenditure and are trying to get more out of current systems.
"Information on just how much they are budgeting for is difficult to obtain. Last year we estimated that the banks were budgeting to expand their IT expenditure by 11%. However, in real terms this is flat," she says.
According to BMI-TechKnowledge, banks dominate IT expenditure in the financial services sector with 61%. Insurance companies take up 31%, asset management groups 4%, securities trading houses 3% and private banking 1%.
Van Rensburg says another factor that will impact IT expenditure is the centralisation of decision-making from the previous "federalised" model, and there is also consolidation at the systems level.
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