Mergers and acquisitions within the financial services technology industry are picking up speed. Momentum is being driven by financial institutions once again focusing on growth, and technology providers looking to take advantage of new market opportunities while deepening customer relationships through more effective cross-selling. Financial institutions are also looking to limit their number of vendor relationships, making it difficult for niche players to compete against larger providers with full product portfolios. The market can therefore expect to see many of these niche players joining forces over the coming months to better meet bank technology needs and offer bundled pricing for tightly integrated products.
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The updated Federal Financial Institutions Examination Council (FFIEC) guidance on online fraud mitigation has finally been released. My first reaction: Why did this take more than six months to finalize? The preliminary draft of this guidance was published on the National Credit Union Administration (NCUA) website last December, and a side-by-side comparison reveals very few changes. With all of the activity and commentary on the preliminary draft, I expected to see a more adjustments to this iteration. The only significant changes are as follows:
Over the last several years, financial institutions have done a grand job of destroying trust and creating angst among the consumers they serve and the public at large. I rarely meet a person today that does not have a story about how badly they have been treated by a bank or how hard it is to borrow money. No one is shedding a tear for the banks. On the heels of the financial collapse has been an onslaught of financial reform from powerful legislators such as Chris Dodd, Barney Frank, and Dick Durbin.
The Securities and Exchange Commission (SEC) is coming to the rescue of the investment community; it is considering leveling civil fraud charges against credit rating agencies (CRAs) -- in particular Standard & Poor’s (S&P) and Moody’s -- in relation to their roles in facilitating the 2008 and 2009 financial collapse via mortgage securities’ ratings.
This is reminiscent of an old Honeymooner’s episode in which Ed Norton tries to convince his buddy (Ralph Kramden) that he has his best interest at heart: “Who took you to the hospital and took care of you when you got hit in the head with a bat? It was me.” After a momentary pause, his friend responds, “You’re the one who hit me in the head with the bat!” And so it is with the way the SEC is managing CRAs.
At recent analyst events I have been perplexed by the thinking of some industry colleagues on the issue of “regulating cloud computing services.” Cloud computing requires no specific financial regulatory oversight, but a legal framework for control and responsibility for data and standardization. Many confuse the overseeing of cloud computing services with the outsourcing of important functions, which may require specific financial regulatory oversight.