About $6.57bn will be spent on credit risk management software, IT services this year.
The global financial industry spending on software and IT services for credit risk management is expected to reach $6.57bn this year, accounting 17.9% of the overall investments on all risk management software and services spending.
The latest ‘IDC MarketScape: Worldwide Credit Risk Analytics Solution Vendor Assessment 2014’ report added that this industry’s credit risk investments would grow at a 3-year compound annual growth rate (CAGR) of 9% through 2018.
Investments are mainly targeted at building enterprise analytics across credit product, portfolio, and regulatory capital functions; create efficient credit operations and underwriting methodologies; enhance credit capacity and debt collection potential; and support stress testingand capital reporting.
Furthermore, money will also be spent on delivering more granular client profitability assessment; and improving decision making in areas including pricing and capital allocation.
IDC Financial Insights Worldwide Risk Management Strategies team members Li-May Chew and Michael Versace said in a joint statement: "Credit risk is the largest, most elementary risk faced by the international financial industry.
"Leading financial institutions have made measurable headway in laying the foundation for a robust credit risk management system following lessons learned from the global financial crisis."
There has been huge rise in investment in these technologies by market leaders in banking as a first step in core banking transformation; to improve product pricing; for proactive credit exposure assessments, and aligned bank relationships more closely with customers’ credit desire.