A recent report (1) pointed out the organisational challenges that banks are facing in simplifying large complex product ranges. It flagged banks’ slowness to embrace collaborative structures that allow costs to be cut quickly and easily.
Things are changing: the investment banking industry is questioning all sources of cost and actively rationalising.
This is both a cultural and practical challenge. On the one hand, business divisions must be removed, and on the other, real cost savings must be realised across deeply entangled technical environments.
Complex and highly regulated modern financial markets require substantial modelling. But modelling within the banking industry remains fragmented both between – and even within – institutions and is largely built to order.
As a result, financial risk models generate a significant part of the cost of running an investment bank – a cost that continues to rise as regulatory demands increase.
In 2010 industry experts estimated data management and data cleansing costs alone accounted for 70% of the total cost of ownership within risk management. This offers considerable scope for improvement. (2)
Examining the cost of modelling presents a significant opportunity to realise savings – requiring banks to examine every aspect of cost of ownership and the precise practical steps they can take to deliver improvement.
Riskcare’s teams draw on 20 years of experience in model design and implementation.
We are able to provide a unique combination of business, quant, risk and technology practitioners – providing solutions for a wide variety of modelling applications.
(1) McKinsey. The Return of Strategy: a Roadmap to Sustainable Performance for Capital Markets and Investment Banking. (Nov 2013)
(2) Analytics magazine, Sept/Oct 2010
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