February 08, 2001

Much like a New Year's resolution, a budget is meant to give new direction, new focus and purpose for the coming months. That being the case, what better way to determine the agenda of the largest giants on Wall Street than to sit down with some decision makers and learn where their priorities lie for 2001. Most are plunging in with similar plans: to further invest in Web technologies, wireless, customer relationship management, and straight-through processing. There are a few exceptions, those firms that highlighted technologies that others had not even mentioned.

For example, T. Rowe Price CTO Mike Goff said his firm would be making a major push in the direction of voice technologies, while TD Waterhouse's CIO Richard Rzasa was the only one to mention globalization. That said Rzasa also was one who did not bring straight-through processing to the front of his agenda, something most of the other firms ranked in their top three.

As for overall spending forecasts, Meridien Research has conducted a survey of the financial services industry globally--including banking, insurance, and securities and investment firms. The study says it expects spending to increase by about 6.5% or $223 billion. Meridien notes that this is a compressed rate compared to last year, which was closer to 9%. It says the dip in spending is due to several factors including "a slowdown in financial industry earnings growth rates and the growing realization that new spending initiatives and investment have either been more expensive than originally planned or will not lead to the customer adoption rates that were anticipated." The study also notes that IT spending in financial services will reach $63 billion, up from $57 billion for 2000, or about 27% of total IT spending.

In addition, Meridien's report ranked the top strategic initiatives for retail financial services in 2001. These top initiatives varied somewhat from the initiatives that our technology gurus said they were putting their bucks behind.

The report found account aggregation, online fraud detection, better metrics, optimized campaign management and privacy management as the top five initiatives across all financial services institutions.

Our securities and investment CIOs/ CTOs are investing heavily in their Web strategies. They are looking at wireless applications and yes, are focusing on customer relationship management or campaign management. As for how much they are putting toward their goals and what other interesting technologies they are looking at, read on.

Buy Side -- T. Rowe Price to Hone in on Voice Systems

By: Anthony Guerra

Chief Technology Officer at T. Rowe Price Mike Goff says he could use a few more bucks to provide the IT that the business side of his company is demanding. Responsible for initiatives at a mutual fund and asset management company that handles over $185 billion in assets, Goff says an increase of about 20 percent above what he has been allotted for 2001 (which is 20 percent of the company's total operating budget and 10 percent higher than last year's IT budget) is required. "We always have more requests than we have dollars," he says, "so we are constantly doing triage and prioritization on the work that we want to get done."

Last year, that work included development in the area of customer service systems such as call centers, customer relationship software, intelligent call routing and customer service support via the Web. Also, Goff says that resources were routed towards carrying out integration with the international operations that T. Rowe Price acquired from Flemming last year. "Those dollars go to capital, labor, personnel, third-party labor and service contracts with service and support firms around the world," he explains.

For the coming year, Goff says that the emphasis will be on customer relationship management in all facets of the business such as better phone service, new call center systems, voice response systems, and development of a "natural language" technology which can understand and respond to plainly spoken customer requests. Goff explains: "We want to be able to say, 'Hi, I'm calling about my position with IBM, where do I stand, what's my account balance,' those type of things."

Goff also says that Web technologies will be developed for both customer interaction purposes and to gain internal efficiencies by providing customer service representatives with a uniform look at information.

Though the Web might save money in the long run, Goff says for now, it's just an additional line of communication that his budget must find the dollars to support. "The challenge is that we are still in a very fluid state with regard to service channels, people are still expecting that the Web will supplant everything but it doesn't," he says, "the Web is now a new challenge which requires new additional expense and resources against it because telephones and face to face interactions are not going away."

As far as advice for those in a similar position, Goff says to watch out for technologies where the relationship between investment and return is tenuous at best. "Stick to what's proven," he adds, "focus on the business, invest in technology that supports the business and get good partners."