A surge of regulatory reporting mandates on risk and compliance is challenging financial services institutions to articulate approaches to integrate common business processes and IT capabilities across the enterprise.
TowerGroup estimates that total IT investments on risk and compliance solutions will reach $51bn in 2004. Some 30% of these investments are wasteful, given the duplication of IT solutions over multiple functional silos and the inefficiencies of legacy technologies. A pervasive multiplier effect due to the manual procedures involved in exception processing, workarounds, reconcilements, and adjustments increases these inefficiencies and imposes a large burden on the business processes. Therefore, financial institutions are finding significant opportunities to save an estimated overhead of $71bn by investing wisely in data integration and enterprise technologies to improve their operational efficiency as well as cut down their operational losses.
Guillermo Kopp is vice-president of Financial Services Strategies & IT Investments at TowerGroup. E-mail: gkopp@towergroup.com
