November 5, 2012 - Compliance and risk regulations will be the main drivers of technology spending in 2013, says Ovum in its assessment of the '2013 Trends to Watch in Financial Markets Technology'.

In a report authored by its senior analyst for the sector, Rik Turner, Ovum says that a combination of a depressed world economy and tougher regulation will make the financial markets rally to IT in order to underpin more risk-averse business strategies. The consultancy is predicting that despite the squeeze on technology budgets and bank profits money will still have to be found to fulfil regulatory obligations such as Dodd-Frank.

Market participants will have to invest in risk analytics systems in particular, predicts Ovum, covering market, credit, operational, and liquidity risk, in the wake of new post-crash over-the-counter (OTC) transparency regulations and enhanced capital adequacy rules like Basel III.

Companies will need to harness emerging 'in-memory' technology capabilities to handle the kinds of volumes of data at the speeds required for intraday risk management and reporting, adds the consultancy.

"With 2013 comes a lot of challenges for the financial markets, with both the buy and sell sides of the industry turning to greater use of technology as the solution," commented Turner. "The buy side is looking to lower its dependence on brokers with heavy investment into front-end services as it looks to retain a much less faithful client base, whilst the sell side looks to underscore its complex multi-asset strategies with greater product accounting."