FS risk officers consider IT systems significant problem - survey

Chief risk officers at banks and other financial institutions believe their IT systems and infrastructure present a significant problem, according to a Deloitte Touche Tohmatsu survey.

5 comments

FS risk officers consider IT systems significant problem - survey

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

Ever growing regulatory scrutiny has seen financial institutions increase their focus and spending on risk management, the poll of 86 CROs from banks, insurers, and asset managers shows.

Nearly two thirds of respondents report an increase in spending on risk management and compliance. This spending has contributed to confidence, with three quarters claiming that they are at least very effective at risk management overall.

Yet firms are less sure in their technology, with just 25% rating their risk management IT systems as extremely or very effective in data management and maintenance, process architecture and workflow logic or data governance. Meanwhile, 40% are concerned about the capabilities of their firm on the management of risk data.

Less than half of large institutions consider their operational risk technology platform to be extremely or very capable. Only a similar percentage considers their organisation's operational risk technology capabilities as very capable in any area, revealing little progress since a similar 2010 survey.

Smaller institutions - those with less than $10 billion of assets - are particularly concerned about their technology systems. While 48% of large firms think that their platform for operational risk capital calculations is extremely or very capable, only 15% of small institutions do.

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Comments: (5)

Gary Wright 

Cant say any of this will be a shock to anyone in FS. Question what is going to be done about it

Amit Agrawal NA at in transit

I will not be surprised if we will be having more and more new regulations will be imposed on the financial institutions. Thus focus should be on 1 system which can take care of majority of it instead of have 1 product per regulation. For example instead of buying 1 product for FATCA, 1 for regulatory, another one for BASEL instead we should 1 product which can take care of all of them. 

A Finextra member 

The trouble is, in the midst of an onslaught of regulation prompted by the Global Financial Crisis alongside the need to improve capital ratios, banks struggle to convince their shareholders that they need to invest in replacing systems that on the surface of things remain functional.

It's not that banks don't want to change and innovate, it's that they're strangled by the perfect storm of regulatory change, re-capitalisation and a flat economy.  The trouble is, much of that storm has been largely of its own making.

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

Banks are already innovative. MBS, CDO, CDS, CDO2 - these are all examples of highly innovative products from the banking industry. It's another thing whether their innovation has helped enhance shareholder value, boost executive bonuses or make customers' lives easier. IMHO, replacing legacy software by open systems or putting a sticker on the back of my smartphone as a substitute for a plastic card shouldn't be confused for innovativeness. 

Gary Wright 

Banks have never and never will innovate with technology the risks are to high and as has been proved they stick with legacy for as long as they can

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