Basel III and Liquidity Risk Management Solutions: Balancing Compliance and Profitability

by Cubillas Ding,  Medy Agami, December 2, 2013
Industry Trends
Global

Abstract

The implementation of the Basel III requirements has proven to be a challenge for many financial institutions. Banks that were well-capitalized in Europe and the US under the Basel II requirements will find it hard to become compliant with Basel III.

Banks will need to carefully consider the timing of implementation for full compliance. Early adopters can signal strength and soundness in the marketplace, resulting in a competitive advantage. The laggards can take advantage of a more favorable operating environment, resulting in more profitable performance in the short term.

In the report Basel III and Liquidity Risk Management Solutions; Balancing Compliance and Profitability, Celent defines what Basel III questions banks need to answer before selecting an IT vendor. It also provides detailed descriptions of IT vendors and their offerings in each of the Basel III IT layers. This report profiles nine vendors that offer IT solutions that might be identified as key elements for banks to implement and improve their risk management framework and comply with Basel III. Some vendors offer multiple solutions that can cover one or more areas of Basel III, while others have a unique solution covering specific functional elements.

Firms need to have a clear view of what ambitions they want to achieve before building, selecting, or blending Basel toolsets. This means designing a risk IT architecture which delineates policies, rules, guidelines, and standards for the technical layers to support the evolutionary Basel journey toward end game risk management capabilities.

“Basel III should be looked at as a firmwide risk management initiative, rather than merely compliance with regulation.” says Medy Agami, Celent Analyst and author of the report. “We believe that the road to this goes through rigorous integration of risk management across the enterprise.”

The report examines and ranks nine vendors and their solutions in this space featuring Celent’s ABCD Vendor View, which presents a comparative view of the vendor marketplace that visually represents four elements: Advanced Technology, Breadth of functionality, Customer base, and Depth of client services. The vendors profiled in this report include: Axiom Software Laboratories, IBM Algorithmics, Kamakura, Misys, Moody’s, Oracle, PolarisFT, SunGard, and Wolters Kluwer.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Tylor Tourville
ttourville@celent.com
Tel.: +1 617 424 3284

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

Executive Summary

1

Global Impact

2

An Overview of the IT Vendor Spectrum

7

Axiom Software Laboratories

12

IBM/Algorithmics

16

Kamakura

20

Misys

24

Moody’s

27

Oracle

31

PolarisFT

36

SunGard

40

Wolters Kluwer

44

Conclusion

49

Leveraging Celent’s Expertise

50

 

Support for Financial Institutions

50

 

Support for Vendors

50

Related Celent Research

51

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