The proliferation of new regulations emanating from the Dodd-Frank Act, Basel III and Solvency II are collectively inducing an outpouring of technology spending from companies in the financial service sector, a new report finds.
The sixth edition of Chartis Research’s “RiskTech100” report finds compliance concerns driving risk technology expenditures across the industry. Moreover, the principle-based nature of the new regulations is leading to a re-think of organizational structures, business processes and underlying technology architectures as well as fostering a trend toward "value-based compliance" and away from the traditional "tick box" mentality.
“There is a quiet revolution taking place in the financial services industry, where the disciplines of risk and finance are converging,” said Peyman Mestchian, managing partner of Chartis Research.
Indeed, the report encourages insurers to view Solvency II implementation as an investment for the long term rather than a forced march to comply with the regulations.
“They can take the opportunity to create an enterprisewide risk management system with a consistent data platform and good quality risk and finance information,” the report states. “While the current technology market for Solvency II is relatively immature, Chartis believes that over the next few years investment in research and development and merger and acquisition activity will produce more holistic technology offerings in the market.”
Despite the relative youth of the products, Chartis forecasts that the market for Solvency II technology will grow 8 percent from $1.5 billion in 2012 to $1.67 billion in 2013.
-- This article first appeared on Insurance Networking News.