Doing business is getting increasingly complicated, as any business owner knows. As business becomes more global and business regulations increase, particularly in financial services, compliance becomes more critical, and so do the technologies that enable it. In fact, compliance and risk regulations will be the main drivers of technology spending in 2013, according to research group Ovum (News - Alert) in its assessment of the “2013 Trends to Watch in Financial Markets Technology.”
Rik Turner, the senior Ovum analyst who authored the report, said that a combination of a depressed world economy and tougher regulation will make the financial markets turn to IT solutions as a way of identifying more risk-averse business strategies.
He predicts that despite tight technology budgets and low company profits, financial organizations will still seek out these risk-control technology solutions because it would be more expensive in the long run not to purchase them. The report cites regulatory rules such as Dodd-Frank in the U.S. as a main driver of the need for risk avoidance technology.
Market participants will have to invest in risk analytics systems in particular, predicts Ovum, covering market, credit, operational, and liquidity risk, in the wake of new post-crash over-the-counter (OTC) transparency regulations and enhanced capital adequacy rules like Basel III.
Companies will need to harness emerging ‘in-memory’ technology capabilities to handle the kinds of volumes of data at the speeds required for intraday risk management and reporting, adds the consultancy.
“With 2013 comes a lot of challenges for the financial markets, with both the buy and sell sides of the industry turning to greater use of technology as the solution,” said Turner in a statement announcing the new report. “The buy side is looking to lower its dependence on brokers with heavy investment into front-end services as it looks to retain a much less faithful client base, whilst the sell side looks to underscore its complex multi-asset strategies with greater product accounting,” he added.
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Edited by Brooke Neuman