Financial Services IT spend to rise

Financial Services IT spend to rise


Investment in risk technology will go up 12 per cent per year to avoid another sub-prime debacle

Banks will increase spending on operational risk technology from $754m (£381m) in 2007 to more than $1bn (£505m) in 2010 to prevent a repeat of the sub-prime mortgage fiasco, according to analyst Datamonitor.

The credit crisis was exacerbated by an over-reliance on financial models which did not adequately take into account operating risk, says the report.

"Operational risk is critical not only for regulatory compliance but also for efficiency and effectiveness," said Datamonitor senior analyst Damian Shaw-Williams.

The use of models led to a misunderstanding of the risk situation because the true levels of debt were unknown.