North American Financial Services Vertical Communication Solutions Market: Industry

North American Financial Services Vertical Communication Solutions Market

Published Date: July 2007

Published By: Frost & Sullivan

Page Count: 39

Order Code: R1-6046

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Description

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This Frost & Sullivan research service titled North American Financial Services Vertical Communication Solutions Market examines various end user, technology, competitive, and regulatory trends impacting the North American financial services sector. The study highlights adoption trends for various telecom and IT products and analyzes operational priorities and challenges faced by small, medium, and large financial firms. In addition, the study provides an overall telecom/IT spending outlook for the financial vertical.

This analysis is available through our Enterprise Communications Growth Partnership Service program. With this program, clients receive industry-leading market research such as this, along with technical and econometric data and many interactive features including Analyst Inquiry Time and Client Councils.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

Monetary authorities
Credit intermediation and related activities
Securities intermediation and related activities
Insurance carriers and related activities
Funds, trusts, and other financial vehicles

Technologies

The following technologies are covered in this research:

PBX, IP PBX, security, storage, and private lines
Business continuity and managed/hosted services/solutions

Market Overview

Competitive Pressures Compel Adoption of New Communication Technologies in Financial Services Sector

The North American financial services sector has witnessed a wave of consolidation over the last few years and is currently undergoing numerous competitive, regulatory, economic, and technological changes that are influencing the operations of organizations. Technology adoption is becoming an integral part of meeting the challenges that these changes bring, especially since financial companies have been consistent leaders in adopting advanced IT and telecom products, services, and solutions. "Technology spending within the financial services vertical, while a function of overall revenue growth, is likely to remain relatively stable over the next few years," says the analyst of this research service. "This is mainly due to the various market and competitive forces that call for operational efficiency as well as product and service-based differentiation."

For instance, while the enactment and implementation of the Gramm-Leach-Bliley Act created new revenue growth opportunities for various financial institutions, it also led to a sharp increase in competition, calling for superior customer relationship management processes and 24x7x365 customer support using multiple channels such as wireline and wireless devices. This Act also allowed banks and other financial institutions to expand operations across various region of the country. Additionally, companies in the credit intermediation and securities intermediation segments are looking to leverage opportunities in emerging economies such as India and China. This expansion in business activity has created strong demand for telecom and IT solutions including WAN transport and equipment, managed and hosted services, and network security and storage. Companies are also facing new competitive pressures due to the growing presence of online-only financial institutions, forcing them to develop and implement Web-based business strategies and customer support tools.

Regulatory Changes and Need to Reduce Operating Costs Drive Further Investment in Communication Solutions

Implementing new telecom and IT technologies is helping financial institutions reduce operating expenses in the face of declining service fees for various consumer banking services such as checking accounts as well as securities trading. More and more companies are implementing technologies such as voice over Internet protocol (VoIP) in addition to business process automation to contain overall communication costs, while others are migrating to low-cost remote access solutions such as IP VPNs to lower WAN infrastructure expenditure. Business continuity is another major reason for companies to invest in distributed network architectures and establish redundant communications networks to minimize downtimes.

Regulatory compliance requirements also continue to impact operational processes in various financial service companies. For instance, the Check 21 Act required banks to invest in new technology that enables electronic presentment of checks for faster payment processing. Various other regulations have resulted in increased demand for better network/data security, while greater governance by new regulations such as Sarbanes-Oxley have driven investment in regulatory compliance-related technologies and business processes. "From an IT/telecom vendor’s perspective, demand within the financial services vertical is expected to continue to revolve around network security, business continuity, and regulatory compliance-related products over the next couple of years," says the analyst. "These are likely to include firewalls, VPNs, storage devices and services, data center redundancy, and managed services."

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