Compliance will drive IT opportunities in 2010

Melbourne, 1st February 2010. According to Ovum’s new report on 2010 Trends of Financial Markets Technology, financial markets institutions will focus back on achieving revenue growth in 2010, moving on from financial crisis. However, government intervention and regulation will mean that institutions will not be a return to business as usual. The Obama proposals already confirm Ovum’s view on this aspect.

“This will create new IT opportunities for vendors in 2010. However, vendors will need to deal with flat overall IT market as IT cost management remains the order of the day”, said Daniel Mayo, Principal Analyst in Ovum’s Financial Services Technology team.

While government policies will change the industry in the medium-term, 2010 business strategy will be significantly impacted by regulatory policies around risk, compliance, governance and incentive structures. Despite cost pressures remaining in IT, technology will be a required component of strategies to managing future demands

The industry business strategy will be dominated by regulatory focus on liquidity, risk management and driving a structural change in business behavior. Information management and analytics will need to form bedrock of compliance and risk management solutions to allow institutions to deal with a continual evolution of compliance requirements

“Given the events of 2008 and 2009, it is unsurprising that regulators will be focused in driving greater transparency and stronger risk management in the financial markets technology sector”, adds Mayo, based in London. As an immediate outcome, this will drive greater demand for greater frequency, rigor and extent of regulatory reporting. However, in 2010 this will extend from focus on reporting to governance, incentive structures and actual business practices and controls.

The challenge for institutions will be dealing with the evolving nature of demands over 2010 as local and international regulators and governments develop strategies to transform the financial markets sector. While revenue growth will return in 2010, institutions need to maintain strong cost control to restore profitability and IT functions will have to meet demands within flat IT budgets. “This will require institutions to adopt a transformative approach to governance, risk management and compliance, rather than attempt to deal with demands on a one by one basis”, concludes Daniel Mayo.