While overshadowed by the holidays, the season of predictions is upon us and there will be many financial technology prognostications for 2014. Overall, there are already signs that, yes, Virginia, we may have reasons to be jolly next year. If nothing else, we’ll be very busy.
For starters, investment in risk management technologies, services and skills will be more than $71 billion in 2014, according to IDC Financial Insights and its report “Worldwide Financial Services 2014 Top 10 Predictions: Embarking on the Decade of Value Creation.” Firms will be spending more on risk mitigation because they will “industrialize” their credit and market risk systems. They will also be reinvigorating their operational risk disciplines.
The top prediction from IDC Financial Insights (which thinks the industry is in the middle of an IT refresh) is that overall IT spending among financial services firms will be in excess of $430 billion “and will exceed $0.5 trillion by 2020.” (People have to buy the full report to drill down on the major areas of spending.)
The analysts at IDC Financial Insights also predict that firms will be advancing their compliance data management systems with initiatives to “extract additional business and operational value with analytics-based capabilities.” The report, which also covers the fintech issues for consumer banking, takes on big data and analytics; mobile and cloud computing; and social media.
At FTF News, we don’t have an army of analysts to help us predict the future.
Instead, we have decided to focus on the operations battles ahead in 2014. We will be going into detail about them for the Winter/Spring digital magazine of FTF News, an edition that will be out in early February.
For the digital edition, we have identified the following ops struggles for 2014:
- Battle # 1: Facing the Derivatives Revolution: Firms will be tackling a variety of operational issues with over-the-counter derivatives processing reforms, including the issues of credit and derivatives valuation; SEFs and connectivity; clearing; regulatory reporting; collateral management; and the vagaries of margining.
- Battle #2: Knowing Your Customers Better: Knowing and serving customers better is at the heart of FATCA compliance, financial crime detection and social media compliance. Firms will have to know thy customer as thy self as regulators apply more pressure in 2014.
- Battle #3: Automating the Impossibly Manual: Reconciliation and exception management, cost basis reporting and corporate actions processing have lots of moving parts and will need more automation in 2014. Will these important disciplines get the automation they need?
- Battle #4: Mastering the Nuts and Bolts of Operations: The fine print of performance measurement, LEI implementations and IT infrastructure refreshes will challenge firms to get control of the dirty details.
- Battle #5: Getting Ready for the Age of Volcker: With the blessings of the SEC and other regulators, the Volcker Rule will impact operations and many business practices. The new reporting and auditing requirements coupled with banks stepping away from hedge funds and private equity activities will likely change the landscape.
In the special edition, we will also chronicle how JPMorgan has been streamlining its service provider role to compete more effectively in a tougher market. We will also offer a memoir of sorts from someone who was on the ground in Russia during the late 1990’s when the socialist giant went back to capitalism.
As the year comes to a close, I will fight my inclination to be an Eeyore/Scrooge and remind all that it’s the season to be jolly and that Financial Technologies Forum wishes everyone a peaceful and restful holiday break.
Lastly, FTF was very busy in 2013 but we will be slowing down from Christmas Day to New Year’s Day. But we will back at it full speed on January 2, Thursday.
See you in the New Year.
Need a Reprint?
Leave a Reply