New U.S. IT spend avoids old financial tech jobs
Investment in financial technology is making a comeback, but the results on the jobs front are decidedly mixed if you are not trained to keep up.
TowerGroup, the financial IT research firm, predicts a 4.5% increase in spending on IT in financial services from 2004 to 2005.
But that stat may be misleading, says Guillermo Kopp, vice president, financial strategies and IT investments at the group, because investments are growing in new technology and declining in old legacy systems.
'It is very, very bullish for companies focused on the leading edge in financial services - delivery systems, retail bank branch renewal, self-directed interaction, Web Services, and Internet technologies - but it is bearish on maintaining old technology,' Kopp says.
On Wall Street, he sees growth in areas such as portfolio analysis, risk analytics, and corporate lending.
Business process outsourcing is redistributing some work from asset managers to global custodians, and introducing efficiencies in the process - one reason job growth in IT is not rebounding at the same rate as it is for investment bankers, traders, and brokers as the industry recovers from 2001 and 2002.
The type of IT work done in the U.S. is changing as well. Gartner, the market research firm, figures the nation has lost 222,000 IT programmers and analysts working in all industries in four years. It predicts that up to 70% of application development work will disappear in the U.S. through outsourcing and automated development tools.
At a major investment bank, a new CIO marvels at the number of developers still working on applications. That's not a core competence for a bank, he says; Indian software firms can do it better, faster, and cheaper because they have lower labor costs and that's their entire focus.
Individuals in IT posts should keep their skills updated if they want to stay in the field, says TowerGroup's Kopp, and they shouldn't wait for their firms to offer the training.
'COBOL programming is not a profession for the future,' he says. 'The industry is missing the investment in retraining IT professionals so they can play in the leading new technologies. The individual needs to take the initiative and understand not only the technology but the business.'
For the pure technical person, demand remains high in data management and data integration. Firms still have silo systems, so part of the challenge in transformation is to pull together information that is now stored by line of business, product, geography and customer.
Financial firms can't lag in their move to new technology, he adds. If they don't keep pace with new technologies, other competitors will move in on their franchise. eBay and PayPal now run a payments system, once a monopoly of the banks, while new supply chain management software is expanding its scope to cover functionality that once was the exclusive domain of bank treasury and cash management applications.