The FSA's inadvertent tech jobs boon

The need to develop new and better liquidity and risk management reporting IT is going to be one of the key consequences of the Financial Services Authority's new capital requirements of UK financial institutions. This is likely to create more jobs for techies in this space.

The FSA's tough stance on liquidity requirements is going to hit banks' bottom line due to the need to invest around 110bn more in steady, but low yielding, government bonds in the first year alone.

But it's also going to mean greater transparency around the firms' reporting systems, which will need to provide data on a daily, weekly and monthly basis from a wide variety of sources.

The FSA says the, "data concerned would normally be required by most firms for their own purposes in undertaking prudent liquidity risk management."

But PJ Di Giammarino, CEO of financial services technology regulatory think-tank JWG IT, thinks the consequences will be more radical.

"The kneejerk reaction from the regulatory authorities has been to ask for additional data, at a more granular level, with greater frequency, on an ad hoc basis and with larger penalties for not getting it right," he says.

"What you're talking about here is a fundamental shift in banks' information architectures - a lot of regulatory information engineering will be required as siloed information is aggregated, shared and possibly used for long periods of time for purposes which have not yet been made clear."

Estimates by Atos Consulting, which conducted research earlier this year in response to the FSA's initial proposals in December 2008, suggests that implementation will cost the industry between 300-500m and require 15 man-years of additional work.

The larger financial institutions will need to hire additional development staff to change the systems due to their complexity, suggests Di Giammanrino. However, some of the smaller firms may opt of an off-the-shelf solution, which could create jobs within vendors that supply this software.

Ferbach-Software, which offers liquidity stress test software FlexFinance Analytix, is currently looking for sales staff in London, as is Algorithmics. LombardRisk, which rolled out new liquidity risk management software in July, has also recently added to its UK team. And Quadrant Risk Management has partnered with both Spring Programs and Sybase to offer liquidity management tools as a result of FSA requirements, but job opportunities are still currently scarce.

Chris Pickles, head of investment banking and global accounts at BT Global Financial Services adds: "If other regulators follow the FSA's lead then there's going to be a need for financial services firms across the world to invest significantly in risk and compliance technology over the next 12 months."