Many large financial institutions seem caught in a never-ending game of "whack a mole." Every time a bank stops fraud in one area, it pops up in a different area. A top-10 US bank is in the process of implementing an enterprise fraud management system in its retail franchise to mitigate increasingly sophisticated and stealthy fraud exploits. This TowerGroup Research Note provides insights into development of the business case for the enterprise fraud management system and the approach that was used to gain widespread support and approval within the organization for implementation of an enterprise-class technology.

To use cloud computing, financial services institutions need to address many types of operational risk and liability: security, regulation, assurance of availability, overall performance. Due diligence must be more robust than in traditional vendor selection. This TowerGroup Research Note explains how to rethink outsourcing ideas, questions, and governance approaches to manage cloud computing services. It also shows vendors vying for the future of this emerging IT and services delivery method how they can differentiate themselves by eschewing the promises of generic cloud computing and instead offering FSIs industry- and domain-specific capabilities and addressing FSIs' concerns.

Cloud computing is changing pricing approaches for many vendors from traditional licensing and maintenance agreements to on-demand, pay-per-use pricing whether the product is installed locally or on the cloud. Meanwhile, financial services institutions are pressuring vendors to deliver more value at lower cost and with more variable options. This ViewPoint defines "value-based pricing," discusses the opportunities that this approach offers technology vendors to differentiate themselves in the marketplace, grow their business, and foster loyal and long-lasting relationships with their FSI clients, and discusses what FSIs should consider in adopting a value-based buying philosophy.

Analytics is helping financial services institutions turn ever-increasing volumes of data into intelligence to reduce risk, improve operations, and discover competitive advantage. But FSIs are in danger of trading one overload problem (too much data) for another (too much complex insights). The Research Note offers many practical recommendations for ensuring that analytical insights are sound and critical and result in FSI decision makers and customers taking the right actions when the analytics output is overwhelming or the choices unclear. This Note also discusses the next frontier for vendors and FSIs: leveraging human nature to improve human understanding and decision making.

Regulators' proposed requirement of a "living will" for systemically important financial institutions will become a reality for the financial services industry around the globe. Despite good, sound reasons for such plans for orderly liquidation, winding down, or partial divestiture of a financial institution in the event it becomes seriously troubled or at risk of failing, potential drawbacks and unknown unintended consequences may thwart their purpose. This TowerGroup ViewPoint discusses the emerging regulatory requirement and examines the benefits and constraints that living wills would impose on financial institutions as well as possible unintended consequences, both good and bad.

IBM has tendered a $1.4 billion, all-cash, definitive offer to buy Dublin, Ohio-based Sterling Commerce from AT&T in a deal that is IBM's largest acquisition since its 2008 purchase of Cognos. Sterling Commerce fills in some critical gaps in the IBM integration portfolio. This ViewPoint highlights TowerGroup's observations on the acquisition and provides guidance for our clients about what to be mindful of as the acquisition proceeds. Clients should take inventory of their Sterling Commerce and IBM solutions to determine which products and relationships are affected by this acquisition.

US payment card issuers intentionally lag in adoption of the EMV integrated circuit chip for payment cards. Unlike other international regions, the United States has a strong payments network infrastructure with established fraud controls and does not need the chip to prevent use of counterfeit cards. However, US card issuers face the challenge of preventing customers who are global travelers from being orphaned at international points of sale. This TowerGroup ViewPoint discusses the global adoption of EMV cards and suggests that US issuers consider offering dual-purpose magnetic-stripe/EMV-compatible cards for high-net-worth customers, corporations, and other international travelers.

The sovereign debt crisis in Greece is spreading to other sovereign states in the Euro-zone. The crisis has demonstrated the fragility of the European Monetary Union (EMU), and it threatens the development of a pan-European financial services market. This TowerGroup ViewPoint, which is based on the successful hypotheses set out in March 2007 in TowerGroup Research Note V50:29ES, The European Monetary Union (EMU) Beyond 2010: Untested Assumptions, examines the current realities of the crisis and concludes by hypothesizing its impact on the environment for financial services institutions and technology vendors at the end of 2012.

The problem of employee fraud in financial services remains veiled. Most institutions deny they have an employee fraud problem until an incident is uncovered and even then believe the incident to be an isolated event. However, TowerGroup has found the problem to be far more widespread and consequential than most financial institutions want to believe or would lead others to believe. This TowerGroup Research Note analyzes the extent of employee fraud losses at US retail banks, explores some current employee fraud trends, and recommends employee fraud prevention technologies that all financial services institutions should consider.

Opinions on the future of cloud computing in the financial services industry vary, but financial institutions that ignore this trend do so at their own peril. They may one day awaken to find themselves left them behind in speed to market and functionality with an outdated fixed-cost approach to infrastructure, application, and development, costs not borne by competitors that have adopted cloud computing as part of their strategic business model. This Research Note forecasts global spending on cloud computing through 2012 in the financial services industry, by global region, service model (SaaS, IaaS, and PaaS), and deployment model (public, private, hybrid, or community cloud).