Integration of the risk and finance business functions is a top priority for 88% of bank practitioners, according to a new survey launched today by SAP (UK) Limited, despite more than half (54%) yet to implement an enterprise level plan to achieve integration.
SAP (UK) Limited commissioned Chartis Research for the independent survey of 108 practitioners working in banks around the world, which was also supplemented with 25 in-depth interviews. The findings highlight that risk and finance integration projects are largely incomplete; 18% of respondents are the early adopters that cite achieving integration of risk and finance, whilst only 8% state it to not to feature as a priority for their organisation.
The survey stresses that regulatory requirements, including Basel 3 and IFRS, and cost concerns are the key drivers for banks to embark on risk and finance integration projects. Whilst improved decision-making and capital allocation were cited as the top two strategic goals to be achieved by integration of the two business functions.
Key findings of the research include:
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- More than two-thirds (67%) intend to implement, or have already begun to implement, integrated risk and finance at an enterprise level
- Diverging priorities of risk and finance and the disconnect between the front and back office are the most significant organisational barriers to aligning the risk and finance teams
- 62% of respondents said funding for risk and finance integration projects comes from change or special programs budgets
- Data quality is the chief technology priority for 2013-14, alongside embedding risk and financial data throughout the enterprise
“In the wake of the global financial crisis, banks have had to change the way in which they approach the management and integration of risk and finance, and there is obviously a clear appetite to do so,” said Dr Michael Adam, Global Head of Risk & Compliance Solutions, SAP. “The indication of separate budgets being used to fund such projects is encouraging, however more still needs to be done in order to turn the priorities and projects into a reality. Regulatory pressure is a driver however most importantly the risk and finance integration will enable banks to better manage their business enterprise-wide.”
Several technology challenges were explored within the research when it comes to the integration of risk and finance; most popular include data variety, siloed data, data volume and quality of data available. The interviews with respondents raised concerns that new technology systems would not remain cutting edge for long and would require replacement fairly soon after implementation.
“Duplication of data management for lots of legacy systems and valuation / calculation methods for finance and risk management increase the operating costs and makes it impossible to keep up with changing regulatory requirements,” said Adam. “We have a solid platform technology roadmap that evolves with the banks business rather than point product solutions. And we can help banks with a step-by- step implementation to simplify architectures and show ROI in every phase.”
“The results of our survey confirm that a majority of banks see the benefits that are available from aligning risk and finance teams and that they have started projects to achieve these goals, commented Peyman Mestchian, Managing Partner at Chartis. “However, the results of the survey also show what has been a repeated pattern when it comes to risk and finance integration projects. While firms often start off with good intentions, projects often fall by the wayside because of institutional and technological barriers. Risk and finance integration will offer competitive advantages to those banks that implement it and technology vendors ought to invest in systems that would support integration. The market for risk and finance integration is now growing and firms like SAP that have invested in risk and finance solutions are well positioned to capitalize on this opportunity.”
For more information, visit the SAP Newsroom.
About Chartis Research
Chartis is the leading provider of research and analysis on the global market for risk technology. Its goal is to support enterprises as they drive business performance through better risk management, corporate governance and compliance. Chartis helps clients make informed technology and business decisions by providing in-depth analysis and actionable advice on virtually all aspects of risk technology.
The quantitative research of 108 global practitioners for this survey took place in March and April 2013, supplement by 24 in-depth telephone and face-to-face meetings with senior figures from banks and consulting firms.
Chartis Research is authorized and regulated by the Financial Conduct Authority (FCA) for providing investment advice
For more information visit www.chartis-research.com
As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 238,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com