IT Trends in Financial Services

Financial institutions around the world are used to regulations.  However recent financial crisis triggered by subprime mortgages and negative press from Wall Street bonuses has certainly increased the probability of more regulation in the next few years. In addition, executives of financial institutions may be subjects of trial by public due to alleged ‘cosy relationship’ between Wall Street and financial regulatory bodies. Therefore financial institutions have more reasons to step up efforts in compliance control. However there is a few major issues in compliance control

• Too much time and efforts in ensuring compliance, e.g. manual procedures
• Time lag between occurence and detection of exception or non-compliance is too long for purpose of surveillance, e.g. money laundering, terrorist funding
• Automatic compliance control solutions are only applied in selective areas, e.g. trading risk management

Now we have identified motivation and issues for more comprehensive automatic realtime compliance control software, how do we implement it in a reasonable time frame and cost? It is almost impossible or impractical to add realtime compliance control features in existing in-house and third-party financial applications. In my proposed solution, a complex event processing engine is used. The purpose of engine is for filtering events to identify non-compliance. The engine provides a unified framework in processing events. In fact the concept of complex event processing engine is not new (available since 2003) and the engines have been used more extensively in identifying trading opportunities, e.g. trading signals. So the next logical question is ways in providing input for complex event processing engine. Most engines accept text and XML stream. If an application stores data in relational database, then a trigger can be developed to convert data into stream for the engine. If events are logged, then a log event reader can be developed to convert log event to stream.

In short, the case for more comprehensive automatic realtime compliance control solution is established due to increasing regulation. Availability of complex event processing engine in unifying processing of events is also a catalyst for development and adoption of comprehensive automatic realtime compliance control software.