It's been a wild ride for financial services firms in the wake of the Wall Street meltdown. New regulations and overseers, rigorous stress testing, and stringent capital adequacy requirements have led banks to re-examine their operating practices, business models, and customer offerings--and all that adds up to challenges for financial-sector CIOs.

One priority: Enable firms to adjust their business models and operations in response to the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act. "Banks have got to figure out a different way to make money than fee income," says Jim Eckenrode, research executive for banking at TowerGroup, a financial service research and advisory firm. "You have to work a lot harder, while giving the customer confidence that your processes are consistent, fair, and easily understood."

As an industry driven by data, financial CIOs enjoy the biggest IT budgets in the InformationWeek 500. They reported an average IT budget of $448 million compared with an all-industry average of $243 million, and the financial IT budget represents 8.2% of company revenue compared with 2.9% across all industries. With these big budgets, financial services firms engage in higher levels of outsourcing than companies in other industries. Fully 70% of the industry's CIOs report doing offshore IT outsourcing vs. 58% for all industries, while 46% send business processes offshore vs. 32%.

IT spending in financial services has a stronger customer focus than the survey total: 53% of CIOs plan to introduce new IT-led products and services vs. 40% for all industries, and 45% are building improved Web operations and customer experiences vs. 34% for all industries.

Industry Snapshot: Banking and Financial Services

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