What impact will the financial industry meltdown have on the security industry?

By just about anyone's yardstick the current meltdown of the American financial industry is going to have wide spread ripples throughout the world economy. With storied firms like Lehman Brothers and Merrill Lynch about to disappear as independent entities, joining Bear Stearns as victims of the present crisis, we are living through historic times. In hindsight they may rival the great crash of '29.  In fact if not for some of the safeguards and oversights put in after the great crash of '29, the present situation could be even worse.  But for firms like these that even made it through the depression to disappear, you know we are going to need to do more. 

 

A laissez-fare, hands attitude towards regulation of the financial industry is just plain naive.  The outcome of this mess will be that there are going to be new regulations and rules put in place to oversee the financial industry. This will be necessary to show that the industry is worthy of the confidence of the investing public. You can count on it. 

 

What will all this mean for the security industry?  Who knows for sure.  On one hand under the present conditions, the financial sector, long a foundational vertical for just about every security vendor will not have a lot of spare cash for IT in general and I am sure security in particular.  It will be rough sledding trying to convince financial firms that now is a great time to invest money in the latest security technologies.  On the other hand, new regulations and oversight could lead to more compliance.

 

Who can argue that Sarbanes-Oxley did not boost security spending.  By the same measure any new regulation of the industry should have a corresponding element of security and data integrity as part of it.  The issue is that it may be some time until legislation is passed and put into effect.  Until then healthcare and some of the other traditional security verticals are going to be receiving a lot of attention from security vendors I bet.

 

Overall, the security industry will make out better than many other IT sectors.  This meltdown is going to reshape not only Wall Street but Main Street as well.  But in the end there will still be storefronts selling IT security.

 

 

 

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