Aite Group estimates that U.S. bank spending on Basel II related risk management IT efforts will exceed US$1 billion in 2009, representing an over 30%-increase from 2007.
A new Impact Report from Aite Group, LLC provides an overview of Basel II and assesses its impact on U.S. banks. It examines the current risk management environment and considers how banks’ investments in alternative instruments are driving the need for risk management tools. It also profiles the leading vendors of risk management technology that help banks meet Basel II requirements.
While banks and brokerage firms tend to follow the herd on regulatory initiatives like Reg NMS, the Patriot Act, and other developments, this has hardly been the case with Basel II. Instead, according to Aite Group’s report, titled "Basel II or Basel Who: Risk Management Initiatives in the U.S.," improving risk management principles has been an ongoing effort with many banks as they seek to balance new opportunities with new exposure challenges. New instruments, globalization, and active consolidation have created new volatility in markets. That volatility has lead to record profits in some cases, and in the case of subprime impact, some rather negative returns for others. As firms move rapidly to create new investment opportunities, risk management has become a critical component in managing those efforts.
"Aite Group expects slow movement to Basel II initiatives, as U.S. regulators are still soliciting comment letters on specific initiatives and guidelines remain too ambiguous to instill spending in this area," says Adam Honoré, senior analyst at Aite Group and author of this report. "Only the largest banks are moving towards Basel compliance, while regional banks continue to operate with a business-as-usual mentality. The only exceptions are those regional banks that feel they may want to opt into capital accord requirements to avoid adverse selection, or receive second-rate credit that gets turned away from top-tier institutions."
The report contains risk management vendor overviews of Algorithmics, Fermat, FinArch, Quantifi, Reveleus, and SunGard BancWare, with special attention given to their Basel-specific product offerings.
This 59-page Impact Report contains 27 Figures and 6 Tables. Clients of Aite Group’s Retail Banking, Wholesale Banking, Retail Securities & Investments, and Institutional Securities & Investments services can download the report by clicking on the icon to the right.
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