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Risk Management

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Financial Crisis Has Opened Up Opportunities For Innovation In Financial Services, Survey Finds

Areas of innovation include central clearing of OTC derivatives, risk management and increasing transparency and efficiency, according to an ISITC survey.

The economic crisis has offered the financial services industry opportunities for innovation in areas such as central clearing of OTC derivatives, risk management and taking advantage of new regulatory and oversight opportunities, according to a survey carried out by ISITC (International Securities Association for Institutional Trade Communication), the industry trade group focused on standards in transaction processing and related communications.

Although the results show lingering uncertainty in the market, with only 31% of respondents believing the economy is poised to recover in 2010, ISITC said 56% of financial executives surveyed said the economic crisis has offered the industry opportunities for innovation in areas that also included extending transparency, efficiency and automation.

ISITC surveyed 72 people consisting of executives at a variety of firms in the securities processing industry, such as asset managers, custodians, broker/dealers, investment bankers and technology solutions providers.

The survey showed that firms remain primarily concerned with operational risk management, followed by reducing costs and increasing efficiency " although those concerned with reducing costs decreased from 35% in 2009 to 23% this year.

Results also showed that clearing of OTC derivatives continues to be an issue of importance. The survey found that 64% of respondents' firms are already involved in this initiative, and 58% of those not involved feel their firms should take part.

ISITC found that cloud computing will become a bigger trend: only 21% of respondents' firms are currently involved in cloud computing, but 42% of those not involved feel their firms should become involved, the survey found .

Meanwhile, the majority of respondents' firms are currently focusing on introducing innovations to the middle office and back office (69% and 60%, respectively).

The survey also revealed that 74% of respondents feel that future regulation will not hinder innovation in financial services.

Gary Probert, chair of ISITC, said: "Although there is clearly still some uncertainty in the market, we are excited to see that ISITC members also recognize the unique opportunities here. We look forward to having in-depth conversations about the potential for innovation at our upcoming Industry Forum and Vendor Show as ISITC continues to drive the discussion around innovation in the wider financial services community."

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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