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Banks Making Major Systems Enhancements to Improve Transparency, Says Survey

Increased use of off-the-shelf products will help banks meet regulatory reporting demands in coming years.

In a sign that financial institutions are taking the increased amount of regulatory oversight and demands for greater transparency seriously, many banks are making significant systems enhancements to improve analysis and reporting, according to a survey from the Association of Foreign Banks (AFB) in London. AFB is an organization of 181 foreign banks that do business in the United Kingdom. Bank of America Merrill Lynch, BNY Mellon, Citi, JPMorgan, Northern Trust, TD Bank and Wells Fargo are members of the group.

The survey, sponsored by Oracle Financial Services, shows that banks have been investing in new technology and made considerable changes to IT infrastructures to improve their reporting capability since the 2008 financial crash.

According to the survey, 43 percent of banks are planning to make significant changes to IT systems in the next four years to improve management information, regulatory compliance and risk management. Twenty-one percent of these banks are planning immediate changes (within 12 months). Overall, over half 54 percent will involve data warehouses and 46 percent will involve business intelligence (BI) applications.

Faced with a limited time frame for implementation and extensive financial reporting requirements that require systems to be integrated across business lines, many banks are breaking away from traditional in-house developed systems and are turning to third-party solutions. The survey found that there is a 64 percent decrease in the use of in-house systems today compared to 2008. This trend is likely because respondents cited a need to overcome the inflexibility of in-house core systems, which was the biggest challenge reported in the study.

"Given the multiplicity of core and accounting systems that many banks maintain, the use of data warehouses is becoming increasingly necessary to manage the data," said Darran Goddard, a member of the AFB CFO Committee and Head of Finance & Tax at the London Branch of Landesbank Baden-Wurttemberg, in a press release. "The survey results clearly show that off-the-shelf technology solutions have gained popularity -- presumably as they enable banks to easily compile automated reports with data consolidated from several sources, with little risk of error."

"I also think it's great to see that many banks are satisfied that they are sufficiently set up to meet the new regulatory reporting demands effectively, and that a large proportion of those who are not, report that they are planning significant changes to their IT systems in the short term," Goddard continued. 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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