PracticeConsultingGlobal banks’ IT not ready for Basel II

Global banks' IT not ready for Basel II

Many of the world's largest banks see 'significant challenges' remaining in restructuring IT systems to comply with the impending Basel II Capital Accord regulatory changes, according to research.

Link: Banks risk not meeting Basel deadline

Substantial numbers of banks remain uncertain over budgets, risk-management frameworks and admit to having made insufficient progress in implementation of IT process changes required to meet the regulations.

Basel II updates and expands 1988 capital rules for risk-management practices, with the final guidelines due to be confirmed in late June.

The study, sponsored by Accenture, Mercer Oliver Wyman and SAP, found Basel II will require banks to make significant changes to their business practices.

‘The survey confirms that a quick database and reporting fix was never going to work,’ said Paul Cartwright, a managing director at Accenture, in a statement.

‘Many banks now clearly see the need for combined IT, organisational and process change. Although budgeting was hurt by the last two years of worldwide cost-containment, banks are finding they face significant compliance challenges.’

‘Most banks will tell you that data management remains the greatest single Basel II challenge because you have to utilize detailed information from across the enterprise,’ said Thomas Balgheim, SAP senior vice president, financial services, in a statement.

‘Increased centralisation is a way to improve the likelihood of successful project delivery and cost reduction,’ he added.

The study indicated that uncertainty on the total cost of compliance is broad, with nearly a third of respondents saying they remain unsure of the total cost. Most banks with assets under $100bn expect price tags of €50m or less while nearly two-thirds of larger banks project costs of more than €50m.

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