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25th November 2003 - Although the financial services
market is, in some ways at the forefront of technology
adoption, important barriers are limiting growth in
this vertical industry, according to In-Stat/MDR. The
high-tech market research firm finds that while this
market experiences a critical need for reliability and
performance, it is hindered by its extremely cautious
approach to IT spending and network implementation.
The financial services vertical is, in many ways, very
similar to other verticals, in terms of their networking
and connectivity needs-there is an increasing demand
for faster, more reliable, more secure access to both
internal and external information. In addition to this,
the industry must meet rigid service levels and, thus,
the network must be available. This is especially true
for security solutions, for which the financial services
market is among the more sophisticated verticals. This
industry is very focused on Total Cost of Operation
and demands a proven Return On Investment, partially
due to the tremendous pressure on capital and operating
expenses. While financial institutions are working toward
better communication networks, this goal is being pursued
in an extremely cost-sensitive light. The financial
services market has suffered from the economic downturn,
which has severely impacted many institutions' performance.
As a result, technology spending in this industry has
changed.
In-Stat/MDR has also found that:
- The backbone environment in financial institutions
has largely migrated to higher bandwidth technologies,
with relatively few organizations currently relying
on 10 Mbps shared Ethernet and the majority migrating
to Fast Ethernet, or even Gigabit Ethernet, in some
instances. While Gigabit Ethernet is still relatively
rare at the network edge, many organizations are using
this higher-speed technology in the network core.
However, IT budget cuts have resulted in an overall
decrease in total switch shipments to this vertical
over the past several years. This trend is expected
to reverse in 2004, as shipment levels again begin
to increase.
- While the financial services market may drag in
switch shipments, this market is at the leading edge
of security. Security solution shipments to the financial
services market will experience healthy growth over
the forecasted period (2001-2007).
- In contrast to security, for which the financial
vertical is a primary area of activity, Wireless LAN
has not been as strongly adopted in this vertical.
There are a variety of barriers to the adoption of
WLAN, but two principal concerns are cost and necessity.
Nevertheless, over the last 6 to 12 months WLAN has
slowly begun to appear in this market. Many vendors
view financial services as a future growth opportunity
for WLAN, especially as security concerns are addressed
and IT budgets begin to open.
This Market Alert is drawn from the In-Stat/MDR report,
"Show
Me the Money: Networking Trends in the Financial Services
Vertical", which examines trends in infrastructure/switching,
security and WLAN for the finance vertical. Forecasts
(5 year) and primary research are featured for each
subject explored.
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