In a recently released report, research firm Celent examined the growing market for financial and credit risk systems and urged institutions in the market for such systems to shop around.
As private companies’ budgets for risk management systems grow, Celent said in addition to the main elements of a Basel II solution, such as capital calculators, reporting, data warehouses, and data management tools, institutions are placing a greater emphasis on replacing “peripheral” applications for activities in areas such as asset/liability management, limits management, and credit scoring.
The report, titled “Risk Management and Basel II: Comparing the Financial and Credit Risk Solution Vendors,” Celent assessed offerings from seven vendors. The report examines the state of the market for Basel solutions and the innovative vendors that are helping institutions meet Basel II requirements. The report also examines the lessons learned from the first-wave institutions that have purchased Basel II solutions.
Several vendors offer financial/credit risk and Basel solutions from diverse backgrounds, Celent said in the report. Some vendors are “new” to risk management, while others have functionality covering multiple areas, which can sometimes make the market for solutions confusing.
“Vendor and solution characteristics vary significantly,” said Cubillas Ding, Celent analyst and author of the report. “Given the substantial investments required of these projects, there is a stronger drive for financial institutions, especially for those in non-mandatory jurisdictions outside Europe, to better align risk management ambitions, application functionalities, technology architecture requirements, and vendor capability in various jurisdictions and business lines.”
“With the vendor solutions available today, financial institutions have a range of options from selecting best-in-class components to complement existing functionality, as well as to form closer alliances with their vendors for Basel II compliance development and management,” said Lauren Bender, Celent analyst and co-author of this report.
The report focuses on the technology angle of Basel II solutions. It is intended to be a preliminary guide for institutions planning initiatives and evaluating vendors to prepare for the new Basel regime. The vendors analysed in detail include: Algorithmics, Fermat, i-flex Reveleus, Misys Almonde, SAP, SAS, and SunGard.
The 68-page report contains 27 figures and 14 tables.