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ZONE SE7EN > Blog > Enterprise Communications > IDC Predicts High IT Spending for Financial Sector over Coming Years

IDC Predicts High IT Spending for Financial Sector over Coming Years

By Allie Philpin

The level of demand on compliance for financial institutions is at its highest level, and IDC predicts that the levels of IT spend for financial institutions to meet these demands, reaching as much as $80 billion by 2017!  Just managing their data can lead to thousands of man-hours every year, which leads to companies having to adapt and seek out new ways to deal with the burden it brings.

The Dodd-Frank Comprehensive Capital Analysis & Review requires organisations to provide regular data submissions and detailed reports to the US Federal Reserve Board for economic stress testing, and that means a focus on data management for the financial sector, documenting any deviations from the specified format, just to satisfy the scrutiny of the regulators.  Many organisations have started to use a self-service data assurance approach in order to meet these terms, and reduce their reliance on IT and operations for the data management aspect, thereby improving effectiveness.

This self-service data assurance approach combined with data analysis tools has delivered greater access, validation and analysis of compliance to CCAR teams, allowing them to deal with changes in data rules and high frequency reporting on a monthly basis.  And then there’s the added benefit of improved data transparency…  According to one US financial institution (a bank), the self-service approach has provided cost savings in manpower and reduced the upheavel surrounding the demands of new compliance requirements.  An executive at the bank said: “Data rules, of which there are thousands under CCAR, can be processed and applied at least ten times faster than before.  For example, rule modifications from the FRB can now be applied in minutes as opposed to the previous turnaround time of days or weeks.”

And it’s not just the US financial sector that’s having to meet new regulatory demands; in Europe, data management and regulatory requirements are just as high, with many organisations watching and considering the US self-service approach.  The burden on data assurance and reporting has recently increased with FATCA and inter-governmental agreements adding extra pressure on compliance teams.  In addition to this, Gibraltar, the Isle of Man, Bermuda, Guernsey and Jersey have entered into IGAs for tax information exchange with the UK, and the Bank of England have just outlined a stress tests framework for the UK banking system.

It seems that a self-service approach to data assurance and management could well be the answer to meeting the ever-increasing compliance demands for the financial sector, lifting the reliance on an organisation’s IT infrastructure and connecting them to their corporate data, worldwide.

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