Growing regulatory compliance requirements are presenting significant opportunities for Irish software firms targeting the UK financial services market a report commissioned by Enterprise Ireland (EI) UK has found.
The report was based on interviews conducted with senior decision makers at 35 of the UK’s top high street and investment banks, building societies and insurance companies. Among its key findings were that high-street banks in the UK were spending between 20pc and 50pc of their 2004 regulatory compliance budget on IT, with a further increase of up to 10pc predicted for 2005.
“The findings indicate that the software firms most likely to benefit from this will be those selling business process or workflow software. UK financial institutions are seeking partnerships to provide IT systems to satisfy compliance requirements and the growing demands of regulation and corporate governance,” said Judi Blackmur, senior advisor, software and services of EI in the UK.
EI in the UK is currently working with a group of 24 Irish companies that are already targeting this area. It is also promoting Ireland as a centre of excellence for the development of compliance-related technologies, including solutions that address areas such as money laundering, information lifecycle management, financial workflow systems and compliance-focused e-learning.
The regulatory demand upon financial enterprises is substantial and growing. Regulatory requirements such as those falling under Basel II and Sarbanes-Oxley Act 2002 will soon be followed by the UK Companies Act. In addition the EU Financial Services Action Plan consists of 42 directives and rule changes designed to bring about a single market in financial services by 2006.
“Ultimately, for compliance to be effective, there needs to be accountability and visibility from top to bottom within an organisation – fortunately, technologies exist that can help financial institutions to accelerate the adoption of compliance practices and processes, no matter what stage they are currently at,” concluded Blackmur.
The report identifies training and education as the primary areas of spend within the compliance budget, with IT following a close second. While significant changes to IT systems and procedures may be necessary in the short term, decision-makers acknowledge that this process will have future business benefits beyond just being able to meet specific regulations.
An overriding finding of the survey was that institutions increasingly regard compliance as being an integral part of good corporate governance and best business practice, rather than an additional burden forced on them by new regulations. The increased visibility and holistic overview of the enterprise that compliance demands is in line with changes already taking place in many organisations.
Following the launch of this report EI UK has compiled a directory of Irish software vendors with solutions that help facilitate the compliance requirements of financial services institutions. The directory, Compliance Solutions from Ireland, is being circulated throughout EI’s European network with a view to engaging heads of compliance at institutions particularly in France, the Nordic and Benelux states and the UK.
By Brian Skelly