Financial Institutions Web Services Spending Lags
TowerGroup study projects Web services will continue to grow, but the vision of the "networked financial services institution" will not be realized until the end of this decade, at the earliest.The TowerGroup Inc. Tuesday reported that Web services have the potential to alter the business environment and competitive landscape with the financial services market, but that standardization and the development of new protocols remain a roadblock. In a study titled "The Networked Financial Institution: Connections for a Successful Business Strategy," the group said financial services institutions spending on Web services is minor compared with overall technology spending. The Needham, Mass.-based TowerGroup estimates that by 2005 Web services will still represent only $8 billion of the $350 billion spent on IT by financial services institutions worldwide. Interest in, and spending on, Web services will continue to grow, but the TowerGroup projects that the vision of the "networked financial services institution" will not be realized until the end of this decade, at the earliest. In addition, the report said widespread adoption of XML has helped drive the development of other Web services protocols that further extend its capabilities. The combination of standard telecom protocols, such as HTTP and IP, and these new Web services protocols will offer a technology "stack" that many institutions hope will level the playing field among technology vendors and drive better IT products at competitive prices, the report said.
Indeed, the report said, the lack of common platforms and protocols is a significant barrier to realizing the vision of the networked financial services institution. Web services adoption can be expected to drive momentum in the financial services industry as technology providers move toward true standardization.