Regulations and emerging risks are driving sharp increases, further adding to the financial services industry’s staggering IT costs and underscoring the need to improve system performance.
90% of financial services executives expect continued cost increases in their compliance departments over the next 2 years:
- Nearly 50% of the executives expect increases of 10% to 20%, and nearly 20% expect increases of more than 20%.
- Nearly 25% of surveyed firms reported spending more than 5% of net income on compliance. (1)
Per Jim D’Arezzo, CEO of Condusiv Technologies, as the cost of maintaining compliance rises, financial firms must find a path to more sustainable compliance costs.
He notes that the financial services sector is already an outlier in terms of IT cost:
- Financial services devotes 10.5% of total revenue to IT, the largest of any industry – followed by government (7.8%), healthcare (5.0%), wholesale and retail (3.9%) and manufacturing (3.4%).
- Financial services reports the most heavily staffed IT departments, with an average of 15.7 users per IT staffer. (2)
In addition to these operational requirements, IT managers are grappling 3 major compliance risks: i.e. fraud and financial crime risk, business risk and cyber risk.
So, what is the solution? D’Arezzo asserts that the industry consider advanced technologies that provide cost-effective solutions that enhance the function’s performance.
“The only way financial services companies will be able to meet the compliance demands being placed on them, and at the same time meet their efficiency and profitability targets, will be to improve the performance of their existing capacity, particularly regarding I/O reduction.” ~ D’Arezzo
Condusiv’s 2018 I/O Performance Survey revealed that organizations are struggling to get the full lifecycle from their storage and server systems as the growth of data analysis, which is dependent of the speed of input/output (I/O) operations, continues to outpace expectations. 28% of organizations reported user complaints related to sluggish performance from I/O-centric applications.
To be compliant, financial firms must provide timely, accurate, and detailed data about the transactions they manage. The greatest share of the stress this places on the industry’s IT departments come from applications running Microsoft SQL server, due to the burgeoning amounts of data being processed in an increasingly fragmented, digitized, and high-speed industry.
Condusiv has seen users of its software solutions more than double the I/O capability of storage and servers in their configuration. Condusiv strongly encourages IT managers look to increase the efficiencies of the resources they already possess.
- “Compliance Costs for Financial Institutions Will Continue to Increase Over the Next Two Years,” Accenture, April 10, 2017.
- Nash, Kim S., “Information Technology Budgets: Which Industry Spends the Most?”, CIO, November 2, 2007.