Skyping with some old colleagues last night and talk was how Ops, IT and Risk in banks are quietly smiling following the SocGen debacle.
Who will be able to refuse their requests for more headcount and systems spend when they cite control requirements and backlog issues? At the very least, it will be a brave COO or CEO that tries to cut spending in such areas. Moreover, spending requests won’t have to point to specific returns on investment but instead will be able to hint at or cite potential “losses” from weak controls.
With inevitable pressure from regulators to ensure firms have appropriate levels of controls and qualified staff to handle business volumes, no firm will want to face imposed constraints on business volumes because of perceived “back office” issues. Likewise, some CEOs may find themselves having to learn more about middle offices practices than they ever wished and undoubtedly finding lots of practices they suddenly don’t like – “what do you mean, we don’t get clients to sign agreements before trading with them?”
As for IT vendors, you can be sure they will be reaching for the sales literature to ensure it emphasises “strong control framework” is an integral feature of their offering.
A big scandal is always good for business!