Financial institutions are rapidly moving to hosted email compliance and storage services to deal with increasing costs, risks and regulations, according to a study conducted by Forrester Consulting. The study was commissioned by Bloomberg Vault, a service that helps corporations globally meet compliance, regulatory and eDiscovery requirements.
The poll of 187 executives with responsibility for compliance, messaging and legal risk mitigation indicates that financial services firms that once relied on in-house software are now moving to hosted solutions. The cost of meeting new regulatory mandates is a major issue, the study says. More than 60 percent of the respondents polled say that their shift to cloud-based solutions is driven by the promise of lower total cost of ownership (TCO), faster deployments and easier management than on-site deployments. Half of the financial services firms polled say they plan to use hosted compliance solutions by 2012.
“The market has reached a tipping point,” said Harald Collet, global business manager of Bloomberg Vault, which has secured more than 240 clients since it launched a year ago. “We expect to see a significant adoption of cloud?based message archiving by financial services enterprises of all sizes over the next two years.”
Scott Black, general counsel and chief compliance officer, Hudson Bay Capital Management, said, “We evaluated a number of solutions and concluded that a hosted service would streamline compliance and reduce costs. We chose Bloomberg Vault because we wanted an end-to-end solution that integrates real-time policy management and archiving for all our corporate communications. We are especially impressed with Bloomberg’s customised search functionality, as well as its ability to efficiently capture both Bloomberg email and corporate electronic communications.”
Richard Farber, chief compliance officer, KGS-Alpha Capital Markets, said, “Security is crucial when selecting a hosted service, and we believe that Bloomberg Vault offers us a secure hosted compliance solution. In addition, we chose to use this service on the basis of the ease of establishing this service through Bloomberg, and the availability of an integrated solution for oversight and surveillance of emails along with Bloomberg messages.”
Key findings of the survey include:
· Financial services firms struggle with eDiscovery and data privacy – 55 percent of respondents describe complying with data privacy laws as challenging. Also, decision?makers report significant difficulties in meeting litigation requirements, recording and archiving obligations, employee communications monitoring needs and other regulatory requirements.
· Compliance challenges are multi-faceted – Edging out concerns about cost, 75 percent of the financial services decision?makers surveyed highlight concerns about reputational damage in conjunction with regulatory oversight and investigations. Respondents also cite major concerns with compliance?related application integration and lengthy response times.
· Financial services firms focus on a broad set of content for compliance – In addition to email, organisations perceive file shares, physical records, line?of?business applications, mobile messaging and a wide range of other content types and applications to be critical for regulatory purposes.