Over 50% of large financial service institutions surveyed plan to invest at least US$200 million to address global structural reform regulations: Accenture

More than half of large financial service institutions surveyed for a new report by Accenture expect to invest at least US$200 million on projects to overhaul how they do business to address global structural reform (GSR) regulations this year, with nearly one-third expecting to spend at least US$500 million.

Released on Tuesday, the Accenture 2015 Global Structural Reform Study was based on a survey of 131 banking, insurance and capital markets institutions globally, the global management consulting, technology services and outsourcing company said in a statement. A total of 56% expect to invest at least US$200 million (US$100 million in technology spending and an additional US$100 million in non-technology spending).

GSR regulations were introduced to re-shape financial services institutions and make them more resilient following the financial crisis of 2007-2008, Accenture noted in the statement. Less than one-quarter of survey respondents said they are compliant with key GSR regulations, such as Section 165/6 of the Dodd-Frank Act and Basel III.

“Over the past five years, many firms have struggled to keep pace with the multitude of regulatory, conduct and compliance related issues. Their responses have been fragmented and they have made significant investments in people, process and tools to remediate,” said Steve Culp, senior global managing director for Accenture Finance and Risk Services, in the statement. “Looking ahead, the financial services landscape will continue to be re-written, given the cumulative impact of global structural reform, especially for internationally active banks and insurers. Those with a clear and connected global implementation plan in place will be best positioned to get the most from their investments.”

Related: 86% of polled financial services firms to increase risk management investment in next two years: Accenture

Nearly all of the respondent companies said that they are prepared to become compliant with the changing regulations, with 60% saying they are “well prepared” and another 35% saying they are “extremely well prepared.” While nearly all respondents have a change program in place – only 1% said they have no program in place to address the new regulations – four in 10 (42%) said they are running a change program under a global umbrella. And 47% said they are addressing regulatory changes on a regional basis.

While the majority (89%) of respondents said that GSR will increase the industry’s profitability, they also believe that not all institutions will be able to afford the cost of GSR compliance. The statement said that more than two-thirds (71%) of respondents forecast that small banks may fall out of the market because they might not be able to afford to keep up with regulatory changes.

“Financial institutions cannot afford to adopt a wait-and-see approach in their response to the challenges presented by GSR,” added Samantha Regan, a managing director in Accenture Finance and Risk Services and lead of the Regulation and Compliance practice. “First movers can potentially turn this challenge into a competitive advantage, with clients and customers drawn to firms with clear business strategies.”

For the survey, each respondent company had at least US$40 billion in total consolidated assets within a single country and offered more than one product in more than one country. The survey covered all major geographies: Latin America (29% of respondents); Asia-Pacific (25%); Europe (23%); and North America (23%).