According to Chartis Research’s latest report on Credit Risk Management Systems, recent high profile credit, operational and business risk management failures in the financial services industry will result in an enhanced form of Basel II, possibly named Basel III, to be introduced by key regulatory bodies between 2012 and 2016.
Furthermore, Chartis forecasts the worldwide credit risk management systems market to grow at a compound annual growth rate of 7% to $8.63 billion by 2012.
The pure credit risk software market will continue to grow at a healthy 14% compound annual rate estimated to be $1.4 billion in 2008, growing to $2.3 billion by 2012.
“The growth in the credit risk technology market is fuelled by Basel II, the growth in credit risk derivatives and the increasing use of economic capital for managing financial performance. we are also seeing continued regulatory driven demand from the emerging markets such as Asia-Pacific, Middle-East, Latin America and Eastern Europe,” says Chartis in a statement.
Expenditure will come in waves as focus shifts from regulatory compliance to value-adding integrated risk management. The “beyond-Basel II” spend will be driven by the growing need for risk-based performance management leading to investments in risk and finance IT infrastructure.
Four vendors were ranked as leaders in the credit risk technology marketplace. These included Algorithmics, Fermat, SAS and SunGard.