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Risks, Compliance Efforts Gulp Financial Services IT Budgets

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Series of worldwide information technology (IT) spending guides focusing on banking, capital markets, and insurance industries have revealed that risk and compliance efforts are still dictating which IT projects will be getting the green light at capital markets firms in 2014.

Financial insights forecasts on worldwide financial services by the International Data Corporation (IDC) published at the weekend revealed that the sector IT spending will top $430 billion in 2014.

As the global regulatory environment is still a hotbed of activity, the report showed that the industry will see substantial investment in areas such as trader surveillance and operational risk projects as well as initiatives to increase automation in a bid to prevent human error and misconduct.

The Financial Insights Report provided an analysis on the current status and projected growth of IT spending in the banking, capital markets, and insurance industries, published bi-annually, offer an outlook on IT spending over the next five years.

Nigeria CommunicationsWeek recalled that news circulated in Nigeria last week that Nigerian banks borrowed N2.5Trillion in August to cushion liquidity crisis.

While IDC report predicted that banks will account for half of the worldwide total in 2014 with IT spending in the tune of $215 billion, banks, discount houses and other financial institutions in Nigeria have gone on massive borrowing spree, increasing their borrowing from the Central Bank of Nigeria (CBN) by some 210 per cent in one month in order to manage the liquidity crisis.

IDC said that insurance companies will spend $100 billion on IT worldwide in 2014. Asia/Pacific, Latin America, Middle East and Africa will see growth exceeding 7% while Europe and North America remain well below 5%.

Capital Markets firms will invest $110 billion in IT in 2014, with North America accounting for almost half of that amount.

A five-year outlook on IT spending by banks, specialized banking institutions, and credit unions offers IT vendors key information needed to develop effective market strategies and measure growth areas.

According to Karen Massey, senior Analyst, Banking, IDC Financial Insights, “Bankers continue to be selective with IT initiatives, focusing on those that can deliver value to their clients and the organization, while also satisfying the mandate of reducing costs and improving efficiency. Expect to see projects around risk and compliance, core and infrastructure modernization, customer experience, and security, which are lifting our otherwise tempered forecasts.”

Li-May Chew, associate research director, IDC Financial Insights, added that, “As the global economies continue to mend gradually and insurance markets harden, we expect insurers to continue prudently setting aside dollars for technology spending.

“With the necessity for insurers to reinvent and simplify business processes to dramatically reduce cost; their policyholders demanding customized offerings, self-serve capabilities and availability of omni-channel touchpoints; and distributors wanting agency support, reliance on technology can only intensify. We project global IT investments rising to $100 billion in 2014, with a 4.0% compound annual growth rate (CAGR) over the forecast period through 2017.”

Also, Matt Sauer, research manager, Global Securities and Investment Strategies, “As is the case across the financial services industry as a whole, risk and compliance efforts are still dictating which IT projects will be getting the green light at capital markets firms in 2014.

“As the global regulatory environment is still a hotbed of activity, the industry will see substantial investment in areas such as trader surveillance and operational risk projects as well as initiatives to increase automation in a bid to prevent human error and misconduct.”

The IDC Financial Insights’ IT Spending Guides are a benchmark tool with consistent, detailed market data on the corresponding industry and providing a profile of the IT growth opportunity segmented by technology components, solution categories, and institution types and sizes.


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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