A new survey into the future of transaction banking, carried out IBM and SWIFT, reveals that banks plan to increase investment in IT and shared services in order to enable improvements in their risk capabilities, and to prepare themselves for the impact of increased regulatory requirements. Across transaction banking, including both payments and securities businesses, the number of executives considering outsourcing some aspect of their activities has doubled from previous IBM surveys to almost 60 per cent.
In the survey of almost 1200 business and technology executives from across the globe, it was found that, more than a year after the global financial crisis exposed the industry’s failure to properly manage risk, further investment to improve risk management capabilities is still a top priority, as is enhancing flexibility to comply with impending regulatory reform.
Outsourcing and collaborative solutions were widely seen by respondents as the best way to maximise the efficiency of the most commoditised functions such as back office processing. However risk management is considered too critical a function to entrust to a third party, and was identified by most respondents as one of the few areas in which exploiting outsourced and collaborative services is not being considered.
“In the current economic climate, the operational efficiencies to be gained through outsourcing are more appealing than ever and critical as operating margins will be under pressure with increased capital requirements being required by the regulators,” says June Felix, General Manager, IBM Banking and Financial Markets.
Adds Andrew Douglas, head of industry initiatives at SWIFT: “The survey results show that in the wake of the financial crisis, the transaction banking sector is responding pragmatically to the requirements of both the practitioner and the regulator. There is a recognition of the need to get back to basics, and a willingness to invest appropriately to accommodate the twin demands of better risk management and more thoroughgoing regulation.”