In trying to lend a little context to the latest numbers on financial technology spending-and also because this particular column was written in a hotel room, with a business channel on television keeping me company-I couldn't help thinking about the stock market's reaction near the end of August to a sliver of good news from Cisco.
Poor Cisco...but never mind that for now.
One iota of positive news about the company's "real"-that is, sales-related- business prospects pushed a variety of tech-related stocks higher. Of course, there's nothing unusual about stocks getting a bump up or down in sympathy with an industry peer's news. The most interesting element of the Cisco nudge was the degree to which securities brokers and analysts pounced on the hint of a revival of demand among Cisco's customers.
Investors of the world know too well the recent history of capital spending on technology. Too often, those of us in the news media confuse the bursting of the dot-com bubble with the nose-dive in tech spending. They are related, to be sure-companies on their way under don't buy networking equipment-but, with warehouses full and orders evaporating, neither do manufacturers.
But then there's the banks.
New research we report this month suggests that the market for financial IT has participated in the downturn, yet continues to go up. The rate of growth in bank technology spending is slower than expected, but it appears likely that 2001 will end with aggregate spending up as much as 6%, only slightly below the estimates a number of financial services industry analysts shared with Bank Technology News earlier this year ("Up Today, Up Tomorrow," March 2001).
The prognosis for next year is nothing to write home about; for the time being, the industry experts who hold forth on such matters expect the rate of growth to continue slowing in 2002, perhaps coming in closer to 3% to 4% worldwide.
I suppose the "context," in this case, has two elements: There's projected growth in bank IT spending next year compared with the double-digit growth the financial industry experienced in preparing for Y2K. And then there's the projected growth in bank IT spending next year compared with virtually all other sectors.
The second view is prettier.
David Rountree is the editor of Bank Technology News.