Quartet FS commissioned a recent study by research firm Chartis Research, which investigates the key trends in the risk technology marketplace, and uses this to define exactly what is making the modern bank more risk intelligent.
Unsurprisingly, risk management and compliance are currently major priorities for financial institutions, with cutting edge technology increasingly necessary for banks wishing to navigate the risk regulation which has spread globally since the US’s Dodd-Frank Act. Consequently, global IT expenditure is expected to increase by $2 billion over the next 12 months – representing an annual growth rate of ten percent.
Chartis Research finds that firms are now looking for integrated, yet easily adaptable, modular solutions which can be used both cross asset and cross business-unit. The breakdown of silos and the growing complexity of the technology available mean that the industry is beginning to see a shift from banks building risk architecture internally, to a preference for external, componentised solutions. Risk analytics technology will likely continue to be the dominant recipient for risk IT expenditure, with faster analytics capabilities enabling risk insight and aggregation of data at the moment of need – something which simply was not possible just four years ago.
With IT budgets under close scrutiny, the need to do more for less will be a significant factor for decision makers, with ad hoc ‘on the fly’ analysis deemed increasingly necessary. This puts increased pressure on banks and technology providers to develop analytics capabilities which are easily scalable by the end user, and can be integrated effectively into existing architecture to enable smooth business growth in a cost effective manner.
Ultimately, regulators tend to show themselves behind the curve – reacting to market occurrences rather than taking a proactive approach to risk. Consequently it is essential that the risk intelligent, forward-thinking bank begins to put measures in place early, taking advantage of the risk analytics technology available.