21 October 2017
Find out more

Bank spending on risk and compliance wasted - BearingPoint

07 April 2004  |  7310 views  |  0 money in bin_1

Spending on risk and compliance by financial institutions is increasingly wasteful and ineffective due to the absence of enterprise data standards, according to a survey conducted by the Economist Intelligence Unit (EIU) on behalf of consulting and systems integration firm BearingPoint.

BearingPoint says without addressing data management issues, the financial services industry could struggle to complete mergers or acquisitions, or achieve overall growth of any kind.

Survey respondents cited costs and a lack of standardised data models as the two biggest obstacles to effective integration. Only 18% of respondents said their risk applications linked up with CRM systems, while just 37% said their risk software linked with customer data repositories. Less than 50% said risk systems link up with enterprise-wide financial general ledger and MIS systems.

Christopher Formant, BearingPoint's EVP, financial services, says firms have "reached a 'tipping point' where their spending has become reactionary and ineffective because across enterprises, operating and data management structures are in direct conflict with risk management structures".

Formant says the study shows that a majority of financial firms believe that their current governance is not capable of addressing both risk and compliance, which triggers more spending. But existing customer initiatives such as customer relationship management (CRM) and risk management systems can be utilised to help comply with Basel II, USA Patriot Act and Sarbanes-Oxley regulations as these initiatives have overlapping data, process and technology requirements.

BearingPoint says data convergence is the key component of many firms' technology strategies this year and includes not only re-use of existing data across different business applications, but also the development of new, converged data models.

More than 190 executives responded to the survey from across the globe, representing the following regions: Western Europe 26%, Eastern Europe 6%, Asia-Pacific 22%, North America 25%, and Latin America 9% with 11% from the Middle East and Africa.

A separate study by PricewaterhouseCoopers and the EIU suggests that financial institutions have equated good corporate governance with meeting the demands of regulators rather than improving the quality of management.

In a survey of 200 senior executives, 69% agreed that they now had a more systematic process of managing risk in place. However, a noticeably lower proportion of respondents agreed that the board had access to more forward-looking information than before and that there had been a substantive change in the quality of data and metrics available to management.

Says PwC: "It appears that change has occurred by the desire to comply with regulations rather than to improve the institution's management tools."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Stockbrokers admit AML failings

Stockbrokers admit AML failings

01 April 2004  |  6175 views  |  0 comments
European banks to spend $4bn on Basel II compliance - Datamonitor

European banks to spend $4bn on Basel II compliance - Datamonitor

08 January 2004  |  6564 views  |  0 comments
FSA punches holes in bank treasury risk management practices

FSA punches holes in bank treasury risk management practices

06 October 2003  |  10987 views  |  0 comments
Investment in business intelligence and analytics to hit $4.8bn by 2006

Investment in business intelligence and analytics to hit $4.8bn by 2006

02 October 2003  |  4435 views  |  0 comments
BearingPoint teams with Mantas for fraud detection service

BearingPoint teams with Mantas for fraud detection service

01 May 2003  |  4624 views  |  0 comments

Related company news


Related blogs

Create a blog about this story (membership required)
visit www.vasco.comvisit www.atos.netvisit www.fivedegrees.nl

Top topics

Most viewed Most shared
HSBC partners Bud for open banking trialHSBC partners Bud for open banking trial
9836 views comments | 22 tweets | 26 linkedin
satelliteGates Foundation backs Ripple collaboratio...
8917 views comments | 13 tweets | 10 linkedin
Mastercard to roll out blockchain APIMastercard to roll out blockchain API
8494 views comments | 16 tweets | 19 linkedin
IBM uses blockchain to improve cross-border payments processingIBM uses blockchain to improve cross-borde...
8015 views comments | 9 tweets | 17 linkedin
Sibos 2017: API or the highwaySibos 2017: API or the highway
7657 views comments | 10 tweets | 22 linkedin

Featured job

New York, NY - USA (some flexibility on location)

Find your next job