By Tom Van de Velde, Lead Product Manager, SaaS
When was the last time you listened to music on a compact disk or watched a movie on a DVD? No doubt it has been a while. Technology has changed to the point that we can enjoy the experience without having to fumble around with the equipment and paraphernalia through which it used to be delivered.
Under the streaming paradigm, companies use ever more sophisticated software to maintain vast, centrally located databases of continuously updated material acquired through licensing arrangements with content providers. This enables consumers to benefit from far more choice at lower cost. Instead of selling a product – a DVD or CD – these companies sell entertainment as a service.
As experiences go, financial regulatory compliance and reporting may not be all that enjoyable, but a similar dynamic is playing out there, as well. The work done to satisfy supervisory mandates is migrating from systems kept in house to servers owned and operated in secure, remote facilities that provide access to their tech, rather than the tech itself, in a format that is cheaper and easier to use.
The push to adopt software as a service (SaaS) – to convert compliance and reporting systems into a service in the cloud from a machine in the basement – is being driven by a virtuous circle. Innovation creates recognition within the financial services industry that these new technological wrinkles can help compliance and IT staff meet regulatory and business goals. That, in turn, stimulates demand for fresh innovation.
Under the traditional ownership model, compliance and reporting systems are a capital expense, often a big one. And not a one-off, either, as the frenetic pace of change in financial supervision ensures that hardware and software upgrades will be needed continually. Given the tendency of authorities to add items to a bank’s to-do list, the cost of upgrades, and of ancillary items like staff training, can be substantial.