Where does a bank want to focus its talent?
While risk and compliance executives believe a broad range of digital skills will be important to growth, they worry about talent gaps today. The FIS™ Readiness Report: The Hunt for Growth Across the Sell Side – The Outlook for Risk and Compliance found that in several key areas, only 44 percent of risk and compliance executives see their in-house analytics and big data talent as good (versus 48 percent of executives overall), 58 percent say in-house digital change talent is good (60 percent overall), and 44 percent rate in-house software development as good (60 percent overall).
Like other executives, those in risk and compliance see digital skills as crucial drivers of their institutions’ growth objectives: nearly two-thirds (65 percent) say big data and analytics expertise will be a growth enabler over the next 12 months, while almost as many (64 percent) point to the need for digital change skills, and 56 percent cite software development as a key area.
In this day and age, banks are competing with big tech for the best talent, so IT managers need to be thinking about what is exciting and differentiating work for this talent. Given this, what’s the best strategy for addressing challenges like the standardized calculations for FRTB and the initial margin calculated under ISDA SIMM? These are standard, prescribed calculations, allowing little ability for a bank or talent to differentiate, and are not exactly the “sexy” work for the talent available.
So, what are the alternatives? What about outsourcing? Not to a bespoke build which can be equally expensive, but to a service which is providing the calculations for the whole industry – the utility model.
A scalable utility gives you access to the best talent alongside powerful capabilities within a comprehensive service. This service can benefit from the economy of scale since it is performing this service for multiple clients – it can provide the most up-to-date regulatory compliance, geographical localization, and the best transparency and analysis tooling. This is functionality that you might be able to build on your own, but is it where you want to be spending your resources?
So, after assessing the banks requirements, maybe a service-based architecture will allow the bank to focus talent on what it values most.