Risk Management Decisions Can’t Be Made on IT Time (or Budget)
In these interesting times, not-so-lovingly referred to as the “new normal”, it’s the perfect storm for overloaded financial services’ IT departments. Budgets are constrained by recessionary economic growth and new, mandated requirements are being driven by increasing regulations.
In this environment, build or buy is a real easy choice – buying is a very sound decision.
Financial service providers traditionally have managed their own risk applications inside their IT organizations. The traditional IT model has been employed for decades – that is, purchase and manage the hardware and software to manage the business. However, our experience is that while they need the infrastructure to run their business – to manage the money of which they are a steward of – the same model may not be the most effective for either point-of-sale or account-management risk evaluation.
Vendor-managed applications exist to serve where internal resources fall short. Often business managers feel the IT organization is a bottleneck. Not for lack of capability, rather from the time lag in getting to projects. For example, one customer told us his IT department said it would only take two to three weeks to make the changes he needed, but there were six months of backlogged projects ahead of him. This is a particular problem with respect to risk decisions, where quick reaction to the changes in the economy, market, and competition is required. For example, when rule flows need to be changed and decision logic needs to be updated.
Vendors generally can solve problems in a matter of days – often with a far better, more- current product — and bypass internal IT bottlenecks.
Given the rapid pace of change today, financial institutions are barely able to keep up with the speed and the scope of regulatory requirements coming out of local and federal governments. From a resource management perspective, this can tax a Chief Information Officer’s ability to meet the needs of all his internal customers, including changes in risk-decisioning.
Vendor-managed services can create and maintain solutions across multiple organizations to provide vital speed, lower costs and preserve capital. Companies can change policies, rules, even products, without overloading internal IT. This lets a company be more nimble and adaptable and ultimately, more successful.
Or, as one customer said when asked how he planned to keep up with the changing regulations simply said, “I don’t have to worry, I have Equifax to implement them in my time frame.”
If you want to talk to an Equifax specialist about how to be free of IT, please send us an e-mail. If you are interested in learning more about Equifax technologies and analytical services, please sign up for our monthly newsletter. It summarizes the new articles in our blog.
This article was contributed by Lee Grice.
Lee Grice has been product manager of Equifax’s InterConnect decisioning platform since it’s inception. He has been with Equifax for over 20 years. Lee graduated from Auburn with a degree in Computer Engineering.
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