Basel 3 Technology Solutions 2013

<p>The financial crisis of 2008 prompted a complete overhaul of the global regulatory system for the financial&nbsp;sector. The significance of Basel 3 in these new regulations cannot be overestimated. It will considerably&nbsp;increase the capital cushion banks must hold, impose major short-term costs on banks, and change the way&nbsp;banks manage themselves.</p>

<p>Basel 3 requires financial institutions to perform more calculations and submit more data to regulators than ever&nbsp;before, while coming under greater pressure to increase their capital, liquid assets, and collateral. The regulatory&nbsp;workload threatens to consume an ever-greater proportion of resources and prevent functions such as risk and&nbsp;finance from pursuing business goals.</p>

<p>Financial institutions need not only to comply with the regulations, but also to know how to adapt to the new&nbsp;environment without sacrificing the efficiency and performance of their business. To adapt to the pressure on&nbsp;resources and the impact of new regulations, financial institutions will therefore need to make a number of&nbsp;changes to improve their performance:</p>

<ul>
<li>Improve capital management</li>
<li>Integrate risk and finance</li>
<li>Integrate liquidity and collateral management</li>
<li>Implement enterprise-wide risk management</li>
<li>Implement enterprise-wide stress testing</li>
</ul>

<p>The success and reliability of any Basel 3 strategy will require robust technology solutions. Investment in&nbsp;technology now will also pay dividends in the long-term by freeing risk and compliance personnel from&nbsp;regulatory duties, allowing them to focus on business goals. This report covers the technologies required for&nbsp;Basel 3 compliance and adaptation, including data models, flexible and real-time analytics, capital calculation&nbsp;engines, and technology support for risk and finance integration, liquidity risk and counterparty credit risk.</p>

<p>This report covers leading practices in these technology areas, key attributes of technology architecture. It also&nbsp;identifies the benefits of investing in sufficiently advanced functionality, and the pros and cons of “buy vs.&nbsp;build”.</p>

<p>In addition, the report covers the competitive landscape. As this is such an important market, it is unsurprising&nbsp;that many vendors have jumped on the “Basel 3 bandwagon” and are advertising “Basel 3 solutions”. While&nbsp;many vendors are making real, innovative improvement to their solutions, some are just using Basel 3 as a&nbsp;marketing opportunity. This has created a sense of confusion amongst risk technology buyers.</p>

<p>This report covers both enterprise and best-of-breed solutions. As Basel 3 covers a range of technology&nbsp;requirements and systems and financial institutions have made varying degrees of progress, firms should&nbsp;consider what elements of a Basel 3 system they need. Implementing an enterprise system may be useful for&nbsp;some banks that have made little progress so far; others may only need specific components, e.g. a liquidity&nbsp;management system. However, in both cases, systems will need to be flexible enough to integrate with other&nbsp;systems and to adapt to the possibility of alterations to the regulations.</p>

<p>This report uses Chartis’s RiskTech Quadrant™ to explain the structure of the market. The RiskTech&nbsp;Quadrant™ uses a comprehensive methodology of in-depth independent research and a clear scoring system to&nbsp;explain which technology solutions meet an organization’s needs. The RiskTech Quadrant™ does not simply&nbsp;describe one technology solution as the best Basel 3 solution; it has a sophisticated ranking methodology to&nbsp;explain which solutions would be best for buyers, depending on their implementation strategies.</p>

<p>This report covers the leading vendors offering Basel 3 solutions, including Axiom SL, Calypso, Fernbach,&nbsp;Fiserv, IBM Algorithmics, Lombard Risk, Markit Analytics, Misys, Moody’s Analytics, Murex, Numerix,&nbsp;OpenLink, Oracle, Prometeia, Quantifi, SAP, SAS, SunGard, and Wolters Kluwer Financial Services.</p>

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• Topics
• Analytics
• Workflow/RPA
• Financial Risk
• Regulatory reporting