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Financial firms to invest more on IT as regulations tighten: survey

Adrian M. Reodique | June 6, 2016
Respondents cited compliance, operational risk management and financial risk management as the three greatest challenges that financial organisations will face this year.

The increasing regulations for non-banking financial firms in the Asia Pacific region will boost the investment in financial IT this year.

This is according to the survey conducted by Asia Risk and Wolters Kluwer with more than 140 participants from a range of job functions and organisation types and sizes in the region. The study aimed to find out the current challenges and concerns with regards to risk management, as well as investment plans in data management and general technological infrastructure. 

The survey asked respondents to score risk-related concerns on a scale of one to seven. Regulatory risk emerged as the greatest concern across organisations in Singapore (55 percent), Australia (47.4 percent), Hong Kong (43.8 percent), China (37.9 percent) and Malaysia (25 percent).

In addition, the survey underscored compliance, operational risk management, and financial risk management as the three greatest challenges that financial organisations face this year.

Securities firms (73 percent) and risk managers (70 percent) across the region cited financial risk management as a major challenge.

Meanwhile, operational risk management is a major challenge to finance (60 percent), risk (70 percent) and IT professionals (100 percent), as well as respondents working at asset management companies, insurance firms and, to a lesser extent, hedge funds.

Compliance, on the other hand, is the major challenge by respondents employed by asset managers (62 percent), respondents at securities firms (60 percent), and nearly 60 percent of portfolio managers.

The survey suggested that investing in technology could address the challenges in compliance and operational and financial risk management. However, it revealed that the current attitudes to technology are middling throughout the market.

When asked to date their organisation's approach to technology, 40 percent said it was "adequate", followed by "good" (22 percent), "excellent" (18 percent) and "poor" (16 percent).

Respondents working on hedge funds rated their organisation's approach as "adequate" or "good" (both 40 percent) and "excellent" (38.5 percent). However, majority of respondents working in securities firms (80 percent) rated their organisation's approach to technology as "poor" while nearly 60 percent of asset managers said their approach was "adequate".


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