Navigating the Risk and Regulatory Maze with a Clearer 20/20 Vision

by Cubillas Ding, May 11, 2016
Industry Trends
Global

Abstract

Celent expects the growth of risk management and risk-related regulatory compliance technology spending in 2019 to hit $72 billion.

The regulatory reform agenda continues to have “long tail” impact on financial services, bearing on the industry’s capital, operating costs, resources, and competitive dynamics. In the report Navigating the Risk and Regulatory Maze with a Clearer 20/20 Vision, Celent examines how risk, capital, and governance-centric regulatory themes continue to shape the industry's imperatives and drive second order effects for risk technology strategies and investment decisions towards the next decade.

Globally, Celent expects the growth of risk management and risk-related regulatory compliance technology spending to hit $72 billion in 2019, at a 10.1% CAGR. This will constitute a significant part of total technology spending across banking, insurance, securities, and investment management sectors in North America, Europe, and Asia-Pacific.

Celent expects non-financial risk spending to grow faster, reaching 29% of total spending, while financial risk will still constitute the bulk of expenditures at 71%. However, from 2015 to 2019, we expect financial risk to shrink by 2.6%, while non-financial risk technology spending is expected to grow faster at 12.7% but only represent a third of the spending.

“Changing industry drivers and regulatory developments could be game-changing mid-term to long-term dynamics that will shape and drive strategic risk management priorities for banks and capital markets firms,” says Cubillas Ding, a research director with Celent’s Securities & Investments practice and author of the report. “Decisions around technology strategies and investments will determine a firm’s prospects into the new decade, 2020 and beyond.”

This 30-page report contains 14 figures and tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

3

 

Key Research Questions

3

Surveying Risk and Regulatory Themes Shaping Imperatives for Strategic Technology Decisions

4

 

Interplay of Emerging and “In-Progress” Regulations

4

 

Tougher Stress Tests to Come

5

 

Overhaul of Trading Book Capital

8

 

Risk-Sensitive Accounting Regimes Will Accelerate Convergence Between Risk and Finance Infrastructures

9

 

Operational and Conduct Risk Continues to Become More Holistic

12

 

Information, Cybersecurity and CISO Alignment with Risk

13

 

Mounting Pressures for Governance and Risk Appetite Management to Demonstrate Tangible Outcomes

14

Global Risk Technology Spending Forecasts

17

 

By Risk Domains

17

 

By Financial Vs. Non-Financial Risk

19

 

By Geographical Regions

20

 

By Internal Vs. External Expenditures

20

 

By Client Segment

21

Closing Thoughts

23

Leveraging Celent’s Expertise

24

 

Support for Financial Institutions

24

 

Support for Vendors

24

Related Celent Research

25

Sign in to download reports and access personalized information