Finance CIOs argue that regulations can spark innovation

In a recent survey conducted by IT consultancy firm Xantus, the financial services sector's Chief Information Officers (CIOs) have shown a significant shift in their approach towards regulatory requirements.

The survey did not disclose the exact number of firms or CIOs involved, but it revealed some striking insights. Nearly all (96%) of the respondents reported an increase in their regulation-related spending over the past three years. This spending, on average, accounts for 28% of their IT budget, with the remaining budget being split equally between maintaining existing systems (36%) and innovative new IT projects to support business objectives (36%).

One anonymous respondent highlighted that regulation can indeed promote innovation when it leads to a more strategic view of the organisation's own information or processes. However, the respondent also cautioned that not every type of regulation lends itself to a strategic view.

The challenge to realizing a strategic view, according to the respondents, concerns personnel. More than half of the respondents reported that their IT departments have lost key innovators during cost reduction drives. This has led to a growing need for IT strategists and systems architects, with nearly all (97%) of the surveyed CIOs now looking to recruit in these areas.

Interestingly, 82% of the surveyed CIOs have used regulatory drivers to build a business case for innovative projects. This strategic response to regulation, as stated by the respondent, comes down to leadership. The choice to adopt such an approach is a testament to the CIOs' ability to see opportunities where others might only see obstacles.

The survey did not mention specific examples of regulations that promote or hinder innovation. However, the respondent further explained that if there's an aspect of regulation which enables a more strategic response, it's the way to introduce innovation.

The report supporting this survey is backed by IT consultancy Xantus, providing a valuable insight into the current state of the financial services sector's approach to innovation and regulation. The findings suggest that, despite the challenges, the sector is embracing regulation as an opportunity to drive innovation, rather than a hindrance to it.