New Financial Regulations Are Coming, and Financial Services Firms Might See a Huge Impact on IT Infrastructure

Global financial services firms are already grappling with a host of regulatory requirements. The task will soon become even more difficult for many firms in the industry, especially those based in Europe, Asia and the Middle East.

The Basel Committee On Banking Supervision, a committee of banking supervisory authorities established by the central bank governors of the Group of Ten countries to provides a forum for cooperation on banking supervisory matters, is overhauling the market risk regulatory capital framework.

The committee released a new market risk framework, Fundamental review of the trading book (FRTB), in January 2016, and the changes that must be made to banks' infrastructures to implement the FRTB standards are "transformational", according to consulting firm EY. The data and technology changes needed to support the requirements of the regulations are significant, the firm said.

When the FRTB regulation is implemented at the end of 2019, the shortcomings of Basel 2.5 revisions will be addressed and accounted for, according to Reuters. But depending on how a firm decides to make changes in its operations to account for the new rules, changes might need to be in place much sooner than that.

What will the new requirements mean in terms of technology infrastructure? Much of that is still unknown at this point. But it is likely the changes in store for financial services firms will have an impact on their IT operations and workloads.

The regulations will require certain changes in the way applications are designed in order to store additional data sets needed for compliance. In some cases the compute cycles during peak times might be as much as four times higher than at other times.

Financial services firms will need to have more flexibility and elasticity with computing and storage capacity, and that can be provided via a cloud-based solution such as HPE Synergy. The platform provides companies with the ability to easily scale capacity up and down as needed.

HPE Synergy, which began shipping in volume in early 2017, is the first computing platform designed to run traditional as well as cloud-native applications in a hybrid IT infrastructure.

The platform is based on an innovative new architecture called Composable Infrastructure. It consists of three main design principles. One is fluid resource pools, so compute, storage and fabric networking can be composed and recomposed based on the precise needs of an application. The second is software-defined intelligence, which self-discovers and self-assembles the infrastructure needed. And a third is unified API, with a single line of code used to abstract every element of infrastructure.

Enterprises shifting from traditional blade or rack-mounted server environments can see reductions of 15% to 18% in total cost of ownership from deploying Synergy. This is driven by the ability to simplify technologies and build intelligence into IT environments, which makes them more cost effective and efficient. Total cost savings is an immediate benefit, but not the only one for customers making the switch. A more robust ability to handle new applications and processes are also a major plus to customers as they modernize their datacenter environments.

A growing number of financial services customers in the regions affected by the regulations are investing in HPE Synergy, as they look to upgrade their infrastructures. These include large-scale global investment banks that want to invest in a platform to host their critical workloads.

One example is a private French bank that replaced its traditional infrastructure with HPE Synergy, and has seen benefits such as greater flexibility and scalability of storage and computing capacity, and reduced operating costs.

With FRTB deadlines looming, financial services firms affected by the new rules need to be preparing for compliance now. Part of that preparation means ensuring that the IT infrastructure can handle and additional strain on capacity. HPE Synergy provides the flexibility firms will almost certainly need to handle the new processes that will emerge.