Gartner Says Worldwide Financial Services Spending to Increase 4 Percent in 2006

Analysts Examine the Future of Financial Services During Gartner Financial Services Technology Summit, August 28-30, in Boston

STAMFORD, Conn., August 16, 2006 – Worldwide financial services spending is projected to total $472.6 billion in 2006, a 3.6 percent increase from 2005 spending of $456.3 billion, according to Gartner, Inc. In 2007, the market is expected to grow 4.5 percent to $493.7 billion.

The market is being driven by a combination of factors, including the economic climate. Industrialized countries are still benefiting from the tail end of the most recent economic expansion which drove higher trading activity, more mergers and acquisitions, and an increase in demand for corporate lending. Developing countries are benefiting from the democratization of wealth in their economies, which is spreading from the high-net-worth population to a much broader mass-affluent population as manufacturing and professional services jobs are generated by global trade.

�As the economy slows down in the United States and perhaps other industrialized economies in the near term, the strong global momentum � and the drive for revenue growth – is likely to be a key driver for growth in the financial services market,� said Susan Cournoyer, research vice president for Gartner. �In the industrialized economies, a slower economy is likely to drive demand for process improvements to deal with impending structural changes in the financial services sector. Financial companies are also seeking market differentiation which is becoming much more difficult as sectorial and geographic barriers fall.�

Banking will continue to be the largest financial service segment worldwide in 2006 because of the size of the mass market for banking services in both industrialized and emerging economies. Banking services spending is expected to total $222.7 billion in 2006, an increase of 3.7 percent from 2005 spending. The insurance and investment services segments are expected to grow 3.1 percent, reaching $136.8 billion and $113 billion, respectively. Global spending in these segments is slower because they tend to serve only the most affluent in emerging economies.

�In emerging economies, the next few years will drive massive expansion of banking services to serve the developing class of the mass affluent and even the unbanked, because of robust manufacturing and professional services industries in the Brazil, Russia, India and China economies,� said Ms. Cournoyer. �In the U.S., the banking sector will spend defensively, to try to prevent the movement of baby boomer assets to investment and insurance companies as baby boomers retire. In Europe, a cohort of extremely competitive global banks has set off on a global race to capture financial assets not only in industrialized countries, but in the emerging economies as well.�

Although the financial services market is robust in many parts of the world and growth is expected through 2010, Gartner analysts said spending increases will be kept in check by consolidation and rationalization of hardware expenditures, and by use of global sourcing for IT professional services.

�Global sourcing generally allows companies to do more with less. Large investment services companies, money center banks, and large insurers have been the predominant users of global sourcing so far,� said Ms. Cournoyer. �The market is expanding from an emphasis on application development and maintenance for back office systems to services for mid-and-front office systems, and selective business process outsourcing (BPO). Over the next two to three years, we expect to see more companies using broader BPO, remote infrastructure outsourcing and consulting. We also expect more global sourcing usage by midsize companies and by the technology and service providers that serve the legions of small financial service providers.�

More detailed analysis on the key technologies for investment services firms will be presented at the Gartner Financial Services Technology Summit, taking place August 28-30 at the Marriott Boston Copley Place in Boston and September 25-26 at the Hilton Metropole Hotel in London. The Gartner Financial Services Technology Summit is the most comprehensive event of its kind designed exclusively for financial services industry IT executives and their business counterparts with a keen interest in the business value of IT. This forum hits the critical spot between strategic planning and tactical advice for IT organizations in banking, investments, and insurance, and looks at the state of IT in the financial services industry, a view of the future, what it takes to be prepared, and the complex IT issues while laying out the manageable actions needed for success.

For complete details on the Boston Summit, please visit www.gartner.com/us/fstech. Members of the media can register by contacting Christy Pettey at christy.pettey@gartner.com.

For information on the London Summit, please visit www.europe.gartner.com/fs. Members of the media can register by contacting Laurence Goasduff at laurence.goasduff@gartner.com.

About Gartner

Gartner, Inc. (NYSE: IT) delivers the technology-related insight necessary for its clients to make the right decisions, every day. Gartner serves 10,000 organizations, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company consists of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 3,700 associates, including 1,200 research analysts and consultants in 75 countries worldwide. For more information, visit www.gartner.com.