Research by consultants Celent highlights the risk that change is being
driven by regulation, rather than innovation. The report, Equipping the Front Office for the New Risk Environment: A Survey of
Strategic and Operational Priorities, observes that the nature of
regulation has changed from something to be complied with or reported on, to an
issue that needs to be contended with from a strategy and competition
standpoint.

Celent expects regulatory changes such as Dodd-Frank and EMIR
derivatives reforms and Basel III, to individually cost between $150 million
and $350 million per firm.

According to Celent firms need to move away from the “incremental
changes and quick fixes” they have tended to pursue in the past and focus on “multifaceted
changes” on the business and technology front. “With firms heavily involved in
compliance-led initiatives, which are characterized by tight deadlines and
reporting obligations, change teams need to bear in mind that their initiatives
must be catalyzed by regulation, but led by innovation and value,” says Cubillas Ding, research
director with Celent’s Capital Markets, Finance and Risk Group.