More than nine out of 10 capital markets executives lack confidence in bank stress testing, while more than 75% are struggling to capture trading system data, according to a survey by Sybase, an SAP company. These key findings, among others, came from a survey conducted in London last week at the Sybase Financial Services Executive Summit, which drew senior managers and C-suite risk management professionals from major capital markets firms.
When asked about the reliability and frequency of bank system stress testing, a combined 94% of respondents were either not at all confident or only somewhat confident that stress testing has addressed all the important risks to the banking system. Directly related, more than eight out of 10 executives surveyed (84%) believe stress testing should be upped to at least every six months. Currently, EU regulators carry out yearly stress tests on the biggest lenders in the region.
Three out of four respondents (76%) said they struggle to capture data from trading systems for audit, compliance or future analytical purposes. At the same time, 75% believe data latency and regulatory challenges will consume the most significant portion of their firm’s resources, followed by front/middle/back office integration (25%). “Merging front and middle office in particular presents numerous challenges, yet they are clearly outweighed by the business benefits. These lines will only continue to blur,” said Stuart Grant, financial services business development manager at Sybase.
Basel III’s impact on profitability will range from moderate to significant, according to nearly all (98%) of those surveyed, indicating another area of concern added to the eurozone’s current anxiety over sovereign debt issues plaguing Greece and other countries.
“There is a significant amount of uncertainty and concern among participants in the capital markets community over the current state and future outlook for the industry. We’re clearly seeing the persistence of chronic challenges, with no immediate relief in sight,” added Grant. “These results don’t come as a surprise, based on the continual feedback we elicit from our customers.”
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