Over the past few years, the bulge-bracket investment banks have indulged in something of a tech-spending frenzy. There have been huge events to prepare for such as the euro, Y2K and Basle II compliance. In addition, post-merger integration has been a major headache and there have been compelling competitive pressures. The development of the internet as a new distribution channel, for example, was something that few banks believed they could ignore in the boom times without grave damage to their businesses.
Unfortunately the rise of online finance coincided with a bull market full of institutions flush with cash, big egos, big money and a tireless quest for the latest IT gadgetry. "There was a triple whammy - a huge internet boom, a massive expectation of what it could do at a time of booming markets and everyone making too much money," says Justin Bull, managing director and head of e-commerce at Barclays Capital. "It made people think they were masters of the universe. It was a wonderful arrogance, but that attitude can also become your comeuppance." Comeuppance has materialized as an enormous amount of waste - without too much to show for it.