December 02, 2013

The Basel III liquidity rules will require banks to create new risk IT policies, standards and systems, which will have to be integrated with risk management functions throughout the organization, according to a new Celent report.

Banks will need a clear picture of the goals and policies they have in mind when picking a compliance solution for Basel III, the report, titled “Basel II and Liquidity Risk Management Solutions; Balancing Compliance and Profitability,” said.

“We believe that the road to [compliance] goes through rigorous integration of risk management across the enterprise,” Medy Agami, a Celent analyst and author of the report, said in a statement.

[For More of Our Basel III Coverage, Check Out: Basel III Brings Opportunity for Banks to Optimize Assets]

The report reviews and outlines the pros and cons of several risk management IT vendors and their Basel III compliance solutions. Some of the vendors offer several solutions for one or more areas of Basel compliance, and others have more specific solutions that cover a narrow element of compliance.

Celent also offers a number of tips to help guide banks in planning their strategy towards Basel III compliance. Banks that move quickly to adopt solutions will gain a competitive edge by showing themselves to be ready for the requirements, the report said. But banks that wait to adopt solutions will benefit from a better operating environment, it added. These factors, along with the bank’s existing IT and risk management infrastructure, have to be taken into account when selecting and blending different solutions, the report advised.

Jonathan Camhi is a graduate of the City University of New York's Graduate School of Journalism, where he focused on international reporting and interned at the Hindustan Times in Delhi, ...