The data systems currently serving firms are no longer able to meet the needs of the future regulatory state. As a result, this year will be marked by the emergence of new operating models, largely under pressure from regulatory requirements.
Holistic approach to risk and regulation
Accurate and reliable risk and regulatory data is needed across the enterprise to enable a holistic view of risk and for firms to align their business and operating strategy to risk. In order to achieve this view a wholesome approach to risk and regulatory compliance is required, which will be driven by headline regulations affecting financial institutions, notably MiFID II, BCBS 239, FRTB etc.
The impact of MiFID II
The transformative impact of MiFID II is perhaps the most disruptive to existing business practice that it will transform in-house technology and systems in a way that we have not seen before. It will be a wake-up call for many firms in the mid- to top tier as their systems were not designed to scale easily to the scope of change required under MiFID II. Data systems being the foundation of many, if not all the business, investment and operating processes which will be under regulatory scrutiny, will be challenged to a make-or-break point!
The regulatory burden may be more overwhelming in 2017 than it may ever have been before, but keeping up with regulations has placed a huge drain on costs and resources thus far. To take a negative and make it a positive provides an opportunity for firms to change their operating mentality and strategy, to make the leap of faith in leveraging regulation to invest in new operating models.