Making compliance work for you
The global financial services industry is a massive opportunity for the channel, writes eg solutions founder Elizabeth Gooch MBE
The global financial services industry, spurred by a tangle of new regulations, is set to pour £64bn into IT services and technology by 2018, opening a growing market opportunity for IT companies.
Tough new rules on everything from data breaches to reporting requirements are transforming risk and compliance into the two biggest growth areas in financial services, expanding the market for innovative IT services and solutions which can reduce the associated costs and risks.
If the UK channel is to capitalise on this, SMEs need to learn how to harness the ‘compliance driver’ by creating solutions and services that can help banks seamlessly adapt to the constantly-fluctuating regulatory environment of the financial services industry, transforming legislative change into an opportunity to improve their businesses and the service they offer to customers.
In 1988 when I first founded eg solutions plc, the Government had just introduced the first wave of regulation on the financial services industry. Implementing this regulation was seen as a massive task for organisations but it created a business opportunity for me. There was a real need for expertise in introducing new business processes that complied with these new regulations.
Back-office processes across many financial institutions remain largely disjointed and this greatly increases the risks and costs of complying with new regulations. IT solutions that can eliminate these processes, automate them, combine them or simply increase speed and accuracy are heavily in demand.
At the time many management consultancies offered abstract advice on compliance, but none of them could explain how to turn complex legal requirements into practical processes, while simultaneously cutting costs.
How to turn a regulatory threat into a business opportunity
My vision was to help banks transform regulatory change into an opportunity to revolutionise their back-office processes. The idea was to use regulations as a spur to bring the transparency, speed and efficiency of the factory assembly line to the financial services industry, transforming stringent new reporting requirements into a golden opportunity for financial institutions to gain a real-time portal into every aspect of their internal processes. This could help more accurately forecast performance and identify time, cost and efficiency savings across the business as well as delivering the evidence of control required for compliance.
The key to breaking into the highly regulated financial services industry was to show prospective customers how our solutions could help avert a regulatory threat while quantifiably reducing costs.
Demonstrating a connection between compliance and the bottom line helps drive sales; eg solutions was able to guarantee savings of at least 20 per cent through proactive management of workloads and resources across an organisation, which helped make the business case for our product.
Even with a product that simply boosts back-office ‘efficiency’, the supplier needs to demonstrate how this feeds into the balance sheet by upping cash flow, cutting Aged Debt or curbing labour costs.
It is also vital for IT companies to realise that they have to compete with established financial services suppliers using unique market expertise; as well as tried, tested and proven solutions. No one likes to be the first customer in the financial services industry unless you find someone who is happy to partner with you and take first mover advantage.
Buffeted by turbulent economic waters, banks are increasingly risk-averse and are increasingly eliminating risk from their supply chain, rendering it imperative for new market entrants to demonstrate that their business is healthy.
There will also be lots of additional security questionnaires to complete and contracting is more onerous. Larger financial institutions will also demand verifiable evidence of previous case studies as well as demonstrable ROI.
We helped convince larger banks to invest by adopting a pay-by-results model where clients do not pay until they have seen the results. So while increased regulation has added an additional burden for all businesses, selling into a regulated industry can be very successful.
For those that are capable of making the necessary adaptations, there has never been a better opportunity for an IT company to enter the financial services market.
Elizabeth Gooch MBE, is founder and CEO of eg solutions, and is an ambassador for CompTIA ‘Advancing Women In IT’ programme, which works to inspire women to enter careers in technology