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2014: More Compliance Mandates, Or A Return To Innovation?

Capital markets CIOs hope that 2014 will allow IT organizations to start working on projects that provide business value, rather than just meet compliance demands.

Following a less-than-spectacular 2013, financial services organizations are looking to 2014 with hope — hope for better business prospects, a more stable marketplace and the chance to spend more time on projects other than technology focused on regulatory compliance.

Capital markets organizations are coming out of a few years of budget slashing, coupled with regulatory demands that severely limited the ability to focus on anything other than compliance. Following a few years of looking only at internal systems, companies need to begin focusing on technology that can drive business change and respond to customer demands.

[SEFs will change the way certain market participants trade and interact in 2014. To learn more, read: SEFs Arrive: A New Market Structure Is Born.]

However, that's easier said than done. Budgets won't increase all that much in 2014, and the compliance demands aren't going away.

Luckily, some much-hyped technologies, such as cloud and big data, are reaching maturity points that are starting to be acceptable for firms. Although cloud security remains a concern, there are a number of offerings that are starting to satisfy CIOs. And big data pilots are beginning to show results, which may help IT leaders fund more big data projects in the near future. Likewise, some industry-mandated initiatives, such as SEFs, are finally in play, hopefully allowing firms to focus on newer technologies for competitive advantage.

WS&T's editors have highlighted some of the topics that will help shape the 2014 capital markets IT landscape. Enjoy. Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio

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User Rank: Author
11/1/2013 | 3:13:01 PM
re: 2014: More Compliance Mandates, Or A Return To Innovation?
Moving functions to third parties or the cloud also helps free up staff that used to work on maintaining those functions. That IT staff can then start working on new innovative projects instead of spending their days maintaining legacy systems.
User Rank: Author
11/1/2013 | 1:59:35 PM
re: 2014: More Compliance Mandates, Or A Return To Innovation?
I agree with Kathy that compliance is a drain on innovation but firms must leverage technologies such as big data and cloud to launch pilot projects with less infrastructure overhead. In big data, firms can subscribe to sentiment/social media analysis services that via ticker symbols and key words can be tailored to their investment/research and trading strategies. Firms will need to pick their spots, but innovation is possible even amidst the steady stream of new compliance rules and mandates.
Greg MacSweeney
Greg MacSweeney,
User Rank: Apprentice
10/31/2013 | 1:15:34 PM
re: 2014: More Compliance Mandates, Or A Return To Innovation?
As you know, Kathy, financial services executives have been complaining about regulation since the beginning of time (well, maybe not that long ago, but shortly thereafter). In good times, regulation is restrictive. In bad times, regulations is killing the business. As you say, it's not going away. Might as well try to make the best of it and extract some value.
User Rank: Author
10/30/2013 | 3:19:53 PM
re: 2014: More Compliance Mandates, Or A Return To Innovation?
Compliance requirements are not going away, as you say if anything they will become more intense. So, rather than wishing them away or complaining that compliance-related investements are detracting from other initiatives -- they have to leverage those compliance investments to seize the opportunities around customer insight, streamlined transactions, etc. As you say, the critical technologies such as big data and cloud are at the center of this.
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