European banks need better integrated risk management - survey
22 October 2010 | 8560 views | 1
European financial services firms are not placing enough emphasis on risk management when it comes to decision-making and performance, while IT systems are struggling to cope with increased regulatory demand, according to research commissioned by Oracle.
Of 222 IT professionals and 228 financial services staff questioned by Vanson Bourne, more than three quarters report being able to monitor and respond to changing risk scenarios but only 18% say they can deliver performance and information to their business instantaneously.
Meanwhile, 86% of respondents expect to see some changes in the regulatory load on their organisation or in the financial services market. Compounding this problem is the fact that 40% believe that increasing compliance coupled with tougher deadlines will continue to hinder data accuracy.
The vast majority - 86% - of the banking sector do not have performance management systems completely integrated with risk analysis systems, indicating the sector has much to do in this area. In addition, 41% of those that do not currently assess risk and performance together are not seeking to actively incorporate risk into decision making.
Only 26% of those quizzed are confident that their existing IT system is capable of using stored data to provide a full risk analysis across all business units. Additionally, just 64% are confident that IT can provide a 360-degree view of the entire business.
Across Emea, a quarter see risk assessment and performance management as being tightly dependent, where both aspects are continuously assessed and reported on. Despite this, almost a third of respondents have an element of their remuneration package based on the accuracy of their information and in next three to five years, 58% will see risk actively be built into the process of pricing products.
With the number of regulations in place for financial institutions, regionally and globally, many are struggling to meet all the demand on them. Nearly half agree that the pressure to hit reporting deadlines has meant in the past that the data used just needed to be "good enough" to get the reporting done, instead of 100 per cent accurate. Despite this, 73% believe accuracy of data should always be more important than the deadline.
Oracle argues that one of the most concerning results from the research is that only 44% are very confident in their company's performance over the next two years. In fact, seven per cent say that they are not at all confident in their company's performance.
Nazif Mohammed, VP, Emea, Oracle Financial Services, says: "The informational needs of financial services institutions have become increasingly complex with new and emerging regulatory requirements. New compliance rules often require cross-functional computations and reporting that cannot be easily supported by existing siloed departmental and legacy infrastructures. A new approach to data sourcing and provisioning is required - one that is unified and begins with a clear understanding of the business use."