Contributor: John Avery
In recent years, Brazil has carved out a position as one of the ten largest economies in the world, with an investment grade credit rating on its sovereign debt and expectations of sustainable, long-term growth. In fact, it’s been widely reported that Brazil has become the sixth largest economy in the world, surpassing the UK for the first time.
All of this sustained growth comes at a price to the banks and other large capital markets players in Brazil who are trying to manage the ever increasing costs of running their IT and operations departments. A significant driver of this growth and demand for IT and operations efficiency is the continued flow of foreign capital into Brazil.
With these greater capital inflows come greater transaction volumes, more complex products, increased operational risk and growing “run the bank” costs because of the manual operational processes and poorly integrated IT systems supporting it all. Add on top of that the continued pace of regulatory change and regulatory requirements that are unique to Brazilian markets, and there’s very little, if any, budget left over for “change the bank” projects needed to increase revenues and improve efficiency.
Budget limitations for “change the bank” projects, pressure to save additional cost and effort by integrating with global bank platforms instead of reinventing the wheel locally, and a shortage of skilled talent are all critical challenges capital markets firms in Brazil are facing in 2012. However, simply adding more bodies or systems to satisfy growth demands is not the answer.
Those having success are investing whatever “change the bank” budget is left in projects to help them reduce “run the bank” costs by increasing technology and operations efficiency. The goal of these projects is greater automation, more consistent system and market integration, and more rigorous process control – the essentials that Wall Street spent the last fifteen years mastering.
Banks and capital markets participants who will continue to be successful will tap into the right mix of people, process and technology from both local and global markets, particularly people with Wall Street experience – the people who have done this before.