GartnerG2 Says Financial Services Providers Must Implement Straight-Through Processing Initiatives to Achieve a Competitive Advantage

Manual Processes Still Prevail Although Anticipated Cost Benefits of STP Are Clear and Significant

Stamford, CONN., August 7, 2003 � Financial services providers have much to gain by automating their trade process by implementing straight-through processing (STP). However many providers are slow in applying this process, according to GartnerG2, a unit of Gartner, Inc. (NYSE: IT and ITB).

In April and May of 2003, GartnerG2 and the Securities Industry Association (SIA) conducted a joint survey by phone and e-mail in which they surveyed 184 financial services providers in 21 countries worldwide about their STP initiatives.

The survey revealed that although two-thirds of respondents have launched at least one STP initiative or are planning one by year-end 2003, manual processes are still prevalent. Forty-two percent of all transactions continue to be paper-based and almost 40 percent of firms manually enter data at least twice for the same transaction.

“STP makes sense for the industry and should be made a priority,” said David Furlonger, vice president and research director for GartnerG2. “STP is much larger than just an IT issue. It directly impacts the bottom line of a financial services firm and ultimately defines its competitive positioning. Firms that pursue STP more aggressively will achieve a competitive advantage over firms that put implementation lower on the priority list.”

Although slow to reach full implementation and meet industry milestones, STP investment will continue. The survey showed that some organizations, particularly in Europe and Asia/Pacific, plan to spend one-quarter of their total IT budgets on STP this year, and a majority of respondents anticipate STP-related spending will increase by 21 percent in 2004.

According to the survey, the most influential of benefits gained by STP implementations are cost savings. Respondents projected that the average cost of doing business would drop by 33 percent, while average labor costs would drop by 39 percent due to reductions in workforce.

However, soft or secondary return on investment (ROI) was considered equally important, including improved customer service, improved internal information flow, faster query resolution and opportunities to cross-sell to existing customers.

Another finding of the survey was that 51 percent of respondents expect gross revenue to grow as a result of STP. However 35 percent were unsure of when ROI goals would be achieved.

“Firms implementing STP must establish and understand ROI expectations to be effective,” said Furlonger. “The continual expression of concern raised by business leaders over the value of IT emphasizes how dangerous it is for financial services providers to rely on perception of return rather than fact. Understanding and calculating ROI from both a business and IT perspective will help focus providers on their long-term value propositions and prevent expensive and potentially catastrophic mistakes.”

The SIA defines STP as “the integration of systems and processes to automate the trade process from trade execution to confirmation and settlement without manual intervention or data re-entry.” In the global securities market, financial services providers recognize the effectiveness of implementing STP in reducing the complexity, cost and risk associated with processing domestic and cross-border trades and speeding the flow of standardized information to all parties involved in the securities markets.

Additional information is available in the GartnerG2 report “Survey Shows Industry Making Efforts Toward STP Implementation.” The report examined how financial services providers are approaching an STP strategy, and why some providers are still waiting to implement a program. The report is available on the GartnerG2 Web site.

GartnerG2 is a research service from Gartner that helps business leaders guide and grow their businesses. For more information on customer lifetime value or about GartnerG2 services, please visit

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