16/05/2011
By Scott Thompson
CIOs are using regulation to create IT innovation in the financial services sector, according to a new report released by consultancy, Xantus. With 57 per cent of CIOs dedicating more than a third of their annual IT Change budget to regulation-specific IT, 87 per cent see the looming clouds of regulation as having a silver lining: driving innovation.
Dave Upton, associate director at Xantus, says: “To make real progress, IT departments must become more proactively involved in the process of achieving regulatory compliance. By gaining a more complete and holistic understanding of regulatory requirements, organisations and their IT departments will be able to exploit the measures to their fullest advantage. This relies on an ability to interpret regulatory demands pragmatically as well as literally, and to be able to differentiate between hard, fast ‘rules’, and more flexible ‘guidance’. Many are already doing this with considerable success.”
Peter Stafford, director of technology services at Nationwide, believes the financial institutions themselves could and should take responsibility for strategic interpretation of what’s required by the regulators.“If we step back, a lot of the regulation is sensible - things either we were doing or should have been doing. It has blown some of the cobwebs away and stops the industry getting complacent. I’d say about 80 per cent is desirable and good practice.”
For Jonathan Kennedy, head of IT service delivery at Northern Rock, a practical balance is best achieved by building a constructive, three-way relationship and discussion which involves the risk/compliance people, IT and the marketing team. “Full alignment between all parties,” should be the aim. “It is possible to include business benefits in regulatory projects – and vice versa. You must look at the portfolio of work that already exists, which means planning is essential. It’s important to see regulation as part of the overall picture.”
The report, Compliance versus innovation: Should CIOs have to choose?, is available at: http://www.xantus.co.uk
