Cost of Operations and Compliance Signals Merger of Banks !

As the cost of operations and compliance keep heading North Banks across the world will have to merge to optimize operational and compliance cost.
We will see a momentum in mergers of even large banks who will be force to come together to beat operational and compliance cost.
What does this mean for bankers, for one the reduction of jobs will be the first of these optimization initiatives, but more importantly Banks will  work towards bringing in outsourced services in-house to help retain their employees.
There will be blood on the Streets and Bankers will have a rocky year but merged banks means fewer Banks for customers to choose.

Banks of Different Shades Will be Forced to Merge !

The Customer will be affected when banks become larger and lose the personal touch which customers enjoy today , customers in the digital world are already transaction driven and do not bother about the human interface in banking anymore.
Unfortunately digital adoption in retail banking has been slow and hence the customer on the street will be stressed with dealing with the new avatars of the Banks.
Wholesale banking will expand as the financial portfolio increases with larger volume of funds to be managed in the merged Banks.
The writing on the wall is clear for Banks across the world, Merge of Perish & Merger of Banks will be the manna for Investment Bankers and Corporate lawyers.
The only Banks exempt will be those who are owned and propped by Governments across the world, whether this model is sustainable is suspect as Central Banks strain to keep these poor performers alive with infusion of fresh capital.
But Banks who cannot merge may also be put down, which will be  a sad day for bankers and banks.
But in a regulated world where the cost of compliance impacts operations the writing on the wall is Loud and Clear for Banks across the World - Merge of Perish.

Compliance alone will not Secure the Bank

Banks scurry to meet compliance requirements; many have a team of professionals whose job is to meet compliance requirements and also convince the auditors that the Bank is Compliant.
A lot of energy is expedited in ensuring SOX, ISO 27 K +++, Basel compliance, the regulators long compliance which banks need to comply with.
Let us focus on Security, many banks have an annual audit and some of them may have a bi- annual audit,
Audits cost time and money and the financial risk management is more demanding then information security; technology is secure, we have a firewall and anti virus and anyways it is not a Board Item in many banks.

Banks need to be able to Crow about their Security 

In the old days information security in banks was bracketed under operational risk, but as banks rely more on technology, information risk management has come out of its own and the banks appoint a CSO, CISO,  GRC Team etc. Many Banks follow a prudent policy of separating IT Risk Management from the IT department and keeping it under the Risk Management Department which is a good practice.
But few banks consider investing on tools and resources that can perform continuous information audit on their information systems. In a fast changing world where banks are held to ransom by organized crime it is time that banks realized that compliance alone will not secure the Bank.
It is time for  banks to invest in SIEM tools, continuous audit and control tools and a team to manage the presence of the bank in a hostile cyber world.
Banks who make the investment in securing themselves in a digital world will survive into the next decade, while others may perish.

Compliance Chokes Cloud Adoption

Cloud Computing provides Agility, Economy, Speed and much more but it cannot be adopted with the Regulator's support.
Lack of guidance for compliance has choked Cloud Adoption and has made cloud adoption similar to  climbing a steep Rock with no guidance.
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Cloud Adoption is like Climbing a Steep Rock !

It is time for the Regulator to understand the Cloud Benefits, overcome its fears on Privacy and Security and provide guidelines for Adoption.
Let 2012 be the year when Regulators support cloud adoption by providing compliance guidelines and may business and the customer benefit by Cloud Adoption.
Are the Regulators Listening ?
Let  healthcare, banking, insurance, financial service and other regulated business benefit and server it customers better with the Regulators support and guidance for Compliance in the Cloud.