Since being signed into law this past July, Dodd-Frank has created many challenges for the Financial Services Industry. New requirements and compliance rules will be affecting nearly every sector of the industry from data management to proprietary trading, but what will the impact be on a firm’s IT department? IT departments are usually asked to create solutions to a firm’s problems, but how can they help their firm prepare for Dodd-Frank when it is still widely undefined? The SEC and other regulatory bodies have yet to release the final rules so everyone, including the IT departments, is currently playing a guessing game on what they think those rules will be.
One thing is for certain, these regulations are bound to increase the cost of doing day-to-day business. IT departments will not only have to comply with Dodd-Frank, but they will need to do it in the most cost effective way possible. For this reason, among others, many firms have begun working on certain aspects of Dodd-Frank even without the official rules in place. They must try their best to get ahead of the many compliance changes that will be coming their way.
Preparation is clearly the key when it comes to Dodd-Frank; the question is how can CIO’s get ready? They will need to modify many of their IT departments’ systems and processes that have been in place for a long period of time in order to be compliant in 2011. As I stated before, being cost effective will be key here, after all, no one has a never-ending budget. Time and resources will be diverted from IT projects that may have been able to help their business grow and shift towards the goal of being compliant. The ideal situation for many CIO’s and their IT teams would be to create useful business processes from the changes they will already be making to their systems in order to be compliant with Dodd-Frank and turn them into a profit, which is easier said than done.
So while no one can truly predict the future when it comes to the Dodd-Frank Act, there is a chance for new innovation and processes to grow out of this junction. If IT departments begin looking at Dodd-Frank as a business opportunity maybe the road ahead won’t seem so unstable. This could possibly be the catalyst that automates data management systems or creates standardized processes across firms. Only time will tell, but Dodd-Frank and IT departments could ultimately lead the way to great opportunities and the redefining of standard business practices.