May 11, 2021 | Stamford, CT — Although COVID-19 disruptions have temporarily depressed demand for new banking products and business lines, banks are setting an ambitious technology agenda. 

For banks in the United States, Europe and Asia, mounting regulatory compliance requirements and the need to improve operational efficiency are driving both an expansion of bank technology investment and an increased willingness to embrace approaches such as SaaS and cloud-based modular solutions.

“Banks’ major technology upgrades are directed at remaking the trading and risk systems that run the bank and ensure that banks are in compliance with fast-changing regulations,” says David Easthope, Senior Analyst for Coalition Greenwich Market Structure & Technology and author The Next Generation of Bank Trading and Risk Technology

To better understand bank priorities for 2021 and beyond, Coalition Greenwich spoke to 30 senior bank executives overseeing various capital markets trading and risk functions, with a focus on their roadmaps and requirements for technology and vendor relationships. More than two-thirds of these executives say their emphasis for the next several years will be simplifying, streamlining and standardizing their IT and operations in order to scale their businesses, as opposed to launching new products and business lines.

Regulatory compliance is also a top priority for bank trading and risk technology groups this year and beyond. Bank executives specifically mention Fundamental Review of the Trading Book (FRTB) along with Interbank Offered Rates (IBOR) transition, Markets in Financial Instruments Directive II (MiFID II), and Uncleared Margin Rules (UMR) as the biggest challenges and highest priorities for the next few years. 

“The laundry list of regulations impacting banks worldwide will require new or improved technology solutions to ensure ongoing compliance and efficiency,” says David Easthope.

Other priorities cited by bank trading and risk technology executives in the report are consolidating and streamlining trading and risk platforms, improving infrastructure for data control, continuing the advancement of electronic trading capabilities, enhancing technology strategies for trading and risk and, in one case, a wholesale digital transformation as part of a move to omnichannel banking.