Changepoint Corporation said in a report that compliance initiatives will require a multi-billion-dollar investment from the financial services industry over the next few years and that IT will be theprimary target.,
The report, “Managing the Challenge of Regulatory Compliance”, written by the Economist Intelligence Unit on behalf of Changepoint, looks at new regulations aimed at standardizing processes in the financial sector and is based on results of a global survey of 166 senior global executives.
Furthermore, the report also accuses regulators of shifting the goal posts by introducing poorly defined compliance rules.
In the survey, 59 per cent of companies are having to invest heavily in adapting their existing IT systems, while 34 per cent are buying new IT systems to achieve their compliance objectives.
While IT will play a critical role in the success of compliance programs, the survey finds that in 63% of the organizations senior IT personnel are not involved at a strategic level when planning the company’s compliance program. Nearly three quarters of the executives in the survey claim compliance is creating a growing burden on company resources, yet only 35 per cent believe it is the most effective way to reduce risk in the industry, the survey showed.
“Basel II alone requires the consistent collection, analysis and reporting of huge volumes of historical data, much of which is locked in different systems scattered around the organization – which is by no means easy.” said Ayman Gabarin, Vice President for EMEA at Changepoint.
“The survey shows that IT plays critical role in archiving and managing compliance while 44% indicate that they not satisfied that their current project management tools do not give senior management a holistic view of projects, resources and timelines and 38 per cent are dissatisfied with the tools they use to manage costs,” Gabarin said.”
“A related problem is the fact that financial institutions’ IT systems are poorly integrated, with 69 per cent of companies agreeing that this adds considerable cost and complexity to compliance programs. The basic principles of sound governance – well defined rules combined with accurate and timely reporting – are crucial to the success of any compliance project,” he said.
Compliance is seen by many as a bitter pill to swallow, but most companies express hope that that they will emerge from the process as stronger, healthier businesses. Sixty-six per cent say compliance will reinforce trust in their brands, while 60 per cent believe it will improve their business performance.
Changepoint is a leading provider of IT governance and business process automation software for global services organizations and corporate IT departments.