Strategic Innovations in Risk Management (Part 3): Sniffing Out the Trail to Game Changers

by Cubillas Ding, October 10, 2013
Industry Trends
Global

Abstract

The shift in sources of value for different market players in risk management is already resulting in discernible implications for winning client propositions and business models. Operational innovations, strategic business capabilities, and new revenue models will separate the winners from the losers.

In the third installment in a series, Strategic Innovations in Risk Management: Sniffing Out the Trail to Game Changers, Celent highlights examples and recommends operational innovations and business capabilities where the possibilities of technology-enabled innovation can lead to significant operational enablement and more profound market disruptions.

Firms are compelled to innovate in a focused and intelligent manner, develop new client propositions, remove overcapacity in business and technology operations, and, at the same time, improve the efficacy of risk and compliance management capabilities. The market environment will drive firms to examine how they operate, manage costs, and achieve differentiation.

“The playbook is changing, but not all new innovations and emerging operating models will survive. As market forces and competitive pressures exert their influence, firms that lack scale and specialization will need to explore ways to maintain parity with ‘at scale’ firms,” says Cubillas Ding, Celent Research Director and author of the report.

“Winning firms will excel by aligning different operational delivery models to access and manage stable sources of liquidity, and effectively integrating infrastructure solutions with risk intermediation activities. This will help them realize an optimal collateral mix, reduce financing costs, manage counterparty credit exposures, and drive vital competitive advantage,” he adds.

This report provides insights and case studies of operational innovations. Strategic business capabilities and new revenue models in the report are based on what Celent considers emerging best practices from experiences in various financial firms, such as BNP Paribas, Citi, DTCC, Euroclear, Goldman Sachs, MFS Investment Management, Morgan Stanley, UBS Investment Bank, Riskalyze, and ZestFinance.

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 subsidiary 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

The Imperative for Innovation Is Growing

3

Exploring Innovation Themes in Risk-Aligned Business Processes and Capabilities

4

 

Operational Innovations and Business Capabilities

4

 

Pre-Deal Capital and Risk Analysis

5

 

Collateral Ecosystem Optimization in the Middle

7

 

Integrated Management of Financial Resources at the Core

0

 

Towards Full Trade Lifecycle Optimization

12

 

Exploiting (Big) Data for Strategic and Operational Advantage

13

 

Opportunities from New Operating and Revenue Models

17

Innovation, Technology Enablers, and Solution Providers

20

Looking Forward: Tying It All Together

22

 

Staying on the Cutting Edge

22

 

Innovation and Differentiation: Maintaining a Balanced Portfolio

22

Leveraging Celent’s Expertise

24

 

Support for Financial Institutions

24

 

Support for Vendors

24

Related Celent Research

25

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