Integration of the risk and finance business functions is a top priority for 88 per cent of bank practitioners, although 54 per cent are yet to implement an enterprise level plan to achieve integration. That’s according to a new survey from SAP (UK).

The company commissioned Chartis Research for a survey of 108 practitioners working in banks around the world. The results show that regulatory requirements, including Basel 3 and IFRS, and cost concerns are the key drivers for banks to embark on risk and finance integration projects. Whilst improved decision-making and capital allocation were cited as the top two strategic goals to be achieved by integration of the two business functions.

Key findings include: 67 per cent intend to implement, or have already begun to implement, integrated risk and finance at an enterprise level; Diverging priorities of risk and finance and the disconnect between the front and back office are the most significant organisational barriers to aligning the risk and finance teams; 62 per cent of respondents said funding for risk and finance integration projects comes from change or special programs budgets; Data quality is the chief technology priority for 2013-14, alongside embedding risk and financial data throughout the enterprise.

“In the wake of the global financial crisis, banks have had to change the way in which they approach the management and integration of risk and finance, and there is obviously a clear appetite to do so,” says Dr Michael Adam, global head of risk & compliance solutions, SAP. “The indication of separate budgets being used to fund such projects is encouraging, however more still needs to be done in order to turn the priorities and projects into a reality. Regulatory pressure is a driver however most importantly the risk and finance integration will enable banks to better manage their business enterprise-wide.”

Several technology challenges were explored within the research when it comes to the integration of risk and finance; most popular include data variety, siloed data, data volume and quality of data available. Concerns were raised that new technology systems would not remain cutting edge for long and would require replacement fairly soon after implementation. “Duplication of data management for lots of legacy systems and valuation/calculation methods for finance and risk management increase the operating costs and makes it impossible to keep up with changing regulatory requirements,” says Adam. “We have a solid platform technology roadmap that evolves with the banks business rather than point product solutions. And we can help banks with a step-by- step implementation to simplify architectures and show ROI in every phase.”

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