There has been in 2012 of an increasing focus on innovation, and increasing investment in innovation across all the world by many banks; this is not a surprise as innovation should be an important driver of long-term growth. However, what are the innovation imperatives and priorities? A recent study published by Cognizant tries to give an answer, clarifying that innovations in financial instruments differ vastly from innovations in other industries, whose benefits and potential downsides are clear:
Unlike a drug whose ill effects may be limited to only those who consumed it, the adverse impact of financial instruments affects the entire economy, not just the parties involved in specific transactions. This is a result of the interconnectedness of financial systems with the general economy, which transmits the benefits and negative impacts of innovations somewhat equally.
Financial firms need to give high priority to making technological enhancements to their banking systems, as this is crucial for achieving several key objectives, from improving processes, to creating transparency and enhancing compliance. To achieve this, they need to overhaul their legacy banking systems, a key part of which is creating consistent data structures across the organization. No wonder enterprise data management has emerged as an important area of focus for financial services firms as they look to prepare for a highly regulated future.