Ronan Bradley's FinanceTech Directions

Everybody accepts that we are entering a new era in financial services regulation but we are still far from knowing what precisely it will look like. The reality is that we don’t even know the shape of the banking industry as we are still in a painful and extended transition. Ron Shevlin amusingly summarises the current situation here as

“Fundamentally, there are four types of firms in the industry. Those that: 1) Were banks, are still banks, but don’t want to be banks. 2) Weren’t banks, but now want to be banks. 3) Weren’t banks, don’t want to be banks, but tell the regulators that they are banks. 4) Aren’t banks, don’t want to be banks, but are told by regulators that they’re banks.”

From an IT planning perspective, this puts us all in a difficult situation: While we can assume that compliance will remain a major driver of IT projects in 2009, the focus will be on opportunistic responses to specific requirements as they arise and it probably won’t be until 2010 until we can assess the new regulatory landscape as a whole.

However, even if we can’t speculate on what the new wave of compliance will hold, we can speculate on the themes which may emerge. In particular, it is reasonable to assume that there will be a much stronger focus on real time assessment of risk which in turn will drive a more integrated and real time view of risk exposure across multiple asset classes. This will partly be driven by regulators wishing to ensure that firms can stay at all times within capital requirements in this highly volatile market and economic situation. However, once life was settled down, it will also be driven by the wish of banks to maximise profitability by improving their ability to manage their exposure to risk in real time.

Ronan