Securities industry IT spending in North America will fall from $21.9 billion in 2008 to $17.9 billion in 2009, a 14.7 percent compound annual growth rate (CAGR) decrease, according to Robert Iati, partner and global head of consulting at TABB Group.

Addressing the impact of recent bank failures at Lehman Brothers and Merrill Lynch on IT expenditures, Iati says that Lehman's spending of $2.5 billion will be reduced to approximately $1 billion in 2009, eliminating redundancies with Barclay's, which is buying the firm.

He adds that there is a clearly identifiable synergy between Merrill Lynch and Bank of America, which should manifest itself in IT, as well as other business areas.

"Their businesses are quite complimentary, which should minimize the redundancies between their technology. While many of Merrill Lynch's current businesses will be run in a manner similar to what has been done in the past, some operating redundancies are inevitable, forcing reduction of staff and systems by at least $1.5 billion to $2 billion. Bank of America's business culture is far more conservative, especially in the current uncertain and volatile market, driving a less aggressive plan for technology spending," says Hegarty.

As a result, he concludes, "remaining investment banks will go into their upcoming 2009 budget meetings needing to reduce their plans another 2 percent to 3 percent in a conservative move."