They fuel our growth.
Everything that’s going on
in our company right now,
started as someone’s bright idea.
They fuel our growth.
Everything that’s going on
in our company right now,
started as someone’s bright idea.
They fuel our growth.
Everything that’s going on
in our company right now,
started as someone’s bright idea.
The Central Bank (Individual Accountability Framework) Bill July 2022: Prepare for the operational impacts!
The introduction of the Individual Accountability Framework (IAF) builds on the regulatory reforms that have taken place in the financial sector in Ireland since the financial crisis, and introduces new financial regulation, with an emphasis on individual and personal accountability and responsibility.
Advanced screening technology is crucial in today’s dynamic sanctions landscape
The challenge of balancing cost-effective sanctions screening solutions with the ever-changing regulatory landscape is bigger than ever. As world events progress, as does sanctions regulation meaning that financial institutions need to adopt a risk-based compliance culture to manage the impact. This blog seeks to outline some of the advances in technology solutions which can help firms face these challenges, focussing on name screening.
CBES highlights the stark cost of climate risk inaction on banks’ bottom lines
In May 2022, the Bank of England (BoE) published the results of its Climate Biennial Exploratory Scenario (CBES) to evaluate the potential impact of the UK’s transition to net-zero carbon emissions by 2050. While admitting that expertise in modelling climate-related risk is in its infancy, the exercise set out to explore the potential risks posed by climate change to UK banks and insurers, whilst searching for the next steps for the industry as well as future CBES exercises.
Agile is not always the silver bullet to your organisation’s transformation
As purists will tell you, the Agile Manifesto was published some 21 years ago to help combat the process heavy bureaucratic model of software development with a shift to a more flexible, dynamic model. Starting out as a simple declaration of values, the Agile movement has grown into a methodology that has transformed the delivery of not just software product development, but departments all throughout the enterprise.
Cloud Adoption: Framing the Strategic Picture
Amidst a great digital revolution accelerated by the Covid pandemic, customers continue to expect all the necessary banking services to be readily available, displaying the most up to date information, accessible from anywhere, and at any time. These increasingly demanding customer expectations are a driving force in compelling many organisations to renew their focus and apply changes across their entire technology organisation to ensure they can support a highly available service, with an ever-improving user experience.
Holding the Fort – Managing Financial and Cyber Crime in the Digital Age
The fast pace of Technology growth and associated intelligence has enabled the Financial sector to develop into a multi-faceted industry. These advancements, however, have come at a price with the sophistication of financial and cyber criminals. At the start of the Covid-19 pandemic (February 2020 to April 2020) cyber-attacks targeting the Financial Sector grew by 238%, and financial fraud losses totalled £783.8 million in the UK in 2020.The gift of technology is widespread, and whilst our financial institutions strive to rapidly adopt it, so do external threat actors with a reported $600 billion lost to cybercrime each year across the global economy. These metrics alone should be a driver for banks to review and develop their Financial Crime and Cybersecurity Risk and Control functions.
The FCA’s latest proposals on the new Consumer Duty set out in Consultation Paper 21/36 represent an important step in the regulator’s efforts to address the ‘Consumer Priorities’ set out in its 2021/22 Business Plan. The new rules seek to remedy harm to consumers resulting from poor practice by firms operating in the retail financial markets. The FCA intends that this higher standard of conduct and consumer protection under the new duty, will see consumers benefit from improved outcomes realised across all stages of the customer journey, regardless of their individual circumstances.
Resolvability Assessment Framework: The Public Disclosure and Beyond
By June 2022, large banks and building societies regulated by the Prudential Regulation Authority (PRA) will, for the first time, make public disclosures on their preparations for resolvability. A resolution of a firm requires it to fail in an orderly way that minimises disruption to its key services and avoids relying on the taxpayer to do so.
The disclosure will summarise the steps to be followed by a firm to facilitate its resolution and crucially, describe the work required to close out remaining gaps in capabilities. Experienced in delivering against the Resolvability Assessment Framework (RAF), BCS can help firms strengthen their resolution capabilities following the disclosures.
Operational Resilience: No time to rest – Transitioning to BAU
As we head into the second quarter of 2022, PRA / FCA regulated firms should have completed their Operational Resilience Self-Assessments to meet the 31st March regulatory deadline. These Self-Assessments are the culmination of a body of work undertaken over the last few years by firms across the industry involving identifying and mapping important business services, setting impact tolerances, running scenario tests, identifying vulnerabilities and developing remediation plans. Time, effort and investment has brought us to this point and we should all rightly acknowledge the good work completed. However, this is no time to down tools.
Think Bigger – Agile Portfolio Management (APM)
Over the past decade we have seen organisations shift from waterfall project delivery to Agile delivery, for example, dividing tasks into the smallest pieces of functionality, delivering multiple workstreams at once, minimal planning beyond MVP’s and allowing teams to innovate and pivot to fit changing external factors as they work towards their solution. But how can these tried and tested principles be allied to an entire portfolio? With Agile Portfolio Management (APM) we take the core Agile principles and apply them at a portfolio level, allowing senior leaders to look across the entire book of change, often in fixed regulatory timelines, and strike a balance between control and agility by leveraging the principles of Agile Delivery at scale.
Cost Allocations: Drivers cannot be captive to data availability
When it comes to cost allocations, there are few topics more emotive than drivers. Unsurprisingly when the metrics chosen determine how much indirect cost a given department will receive, they often become a point of intense, contested debate. A good driver should; 1. ensure a fair and proportionate charge to all consumers, 2. incentivise desired behaviours and 3. be readily available and frequently updated.
Delivery Leadership – The Culture of Change
What is Delivery Leadership?
Delivery Leadership is how the most successful change practitioners manage initiatives and deliver on commitments. To be successful, complex business transformation initiatives need more than just effective management. Delivery Leadership is critical to ensuring that they achieve the underlying business benefits on which they are founded. Delivery Leaders have years of industry expertise, management experience and true leadership credentials. They share a common ability to manage complex change initiatives effectively whilst leading delivery teams and wider organisations through the change journey.
Resilient Operating Models
The impact of the pandemic has changed our personal lives in ways that many of us could not have imagined, only two years ago.
The effect this has had on the world of work, organisations, and the customers they serve is no different.
One thing is increasingly clear – hybrid working, rising cyber-attacks, political instability, climate related disasters and enhanced expectations from a digital world mean that organisations now need to be resilient as part of business as usual (BAU).
Building the data value proposition in Financial Services
Banks, Insurers, Wealth Managers, and all financial services organisations face constant challenges when seeking to drive tangible investment in support of data management goals. There is a ranging balance of motivations that drive many investment decisions within the industry
Customer data management: Pain (and opportunity) for every organisation
Customer data sits at the forefront of many of our clients’ data management concerns. Availability, security and quality of data on customers is not only a regulatory issue for the many financial organisations we work with; it is also a key pillar in most of their data strategies. When a firm sets out its vision for sophisticated analytics capabilities built on well-integrated corporate datasets, customer data is inevitably picked out as one of the most critical success factors.
Schrems II: A catalyst for evolving data privacy practice
In July 2020, claimant Max Schrems emerged victorious from the Court of Justice of the European Union (CJEU) which declared the Privacy Shield transatlantic agreement invalid. The judgement stopped the free flow of personal data between the EEA, UK, and the United States, embedded risk assessments into the rules on international data transfers, and set out stricter requirements for the transfers of personal data based on standard contractual clauses (SCCs).
Financial crime risk technology – Don’t get left behind
How good is good enough? It’s a question compliance professionals may often ask themselves when it comes to managing financial crime risks. The principle-based approach to financial crime regulation around the globe means compliance is rarely measured against a prescriptive set of standards. It also means regulators can continue to raise their expectations through issuance of updated guidance. For example, In June 2021, the FCA published a Dear CEO letter specially targeting Retail banks on several common weaknesses and In April 2021 the HKMA published their thematic review on use of external data, highlighting four key areas of focus.
Managing the financial risks from climate change – PRA SS3/19 Banking Climate Survey
As the end of 2021 deadline for implementation of the PRA SS3/19 supervisory statement approaches, BCS Consulting, part of Accenture has carried out a survey to understand banks’ progress and key areas of focus for managing climate-related financial risks.
All aboard the Release Train
Your organisation has finally decided to move away from Waterfall, and are ready to take the plunge on large-scale Agile adoption. Congratulations! You have been appointed the Release Train Engineer / Tribe Leader / LeSS Coach, and have been tasked with setting up a Release Train for your program in three months. Regardless of the specific form of Scaled Agile being implemented, in our experience there are some key steps to follow to enable the successful launch of a Scaled Agile implementation. When you have multiple teams and individuals encompassing Developers, Product Owners, Scrum Masters, Architects, and formal functions such as Security and Compliance, it is important to set up formal structure, coordination, and transparency across the Train.
Digital Finance – Hanging on to the cutting edge
Digital is the perennial transformation buzzword in Finance. Whether it be controls enhancements in the 00’s, automation post-2008 or Artificial Intelligence and commercial analytics in recent years, Finance teams are continuously implementing ‘the next big thing’.
Lessons from Lockdown, a Risk Management perspective
The rapid shift to remote working at the start of the Covid-19 epidemic provided a unique test for risk management, both in terms of the potential for new and heightened risks, and with respect to how effectively controls and business processes operate in a changed environment.
The loss of a ‘physical’ working environment affected the more traditional methods used to operate controls and influence employee behaviour (such as those focused on ‘supervision’ and ‘reviews’).
Wind-down Planning – How preparing for failure can help your company succeed
Wind-down planning is the process through which a firm identifies the steps involved, resources required, and execution risks in winding down its business in an orderly manner. The objective of a wind-down plan (WDP) is to minimise the impact of a firm’s failure on customers, counterparties, and markets. The FCA considers WDPs relevant for all solo-regulated firms with Part 4A permissions, and since July 2020 has required Payment Services Providers (PSPs) to have a WDP.
Digital Operating Model – Getting the most from Digital Transformation
Digital transformation continues at pace across Financial Services, driven by ever-increasing customer expectations, increased technological innovation
across a broadening range of competitors, and a mounting focus on data amongst both financial institutions and regulators.
Promoting EDI is more than a cause, it should be managed as a risk
Promoting greater equality, diversity, and inclusion (EDI) within the financial services industry (and society more broadly) is seen by many as an important social and moral cause that everyone should believe in. While well intentioned, approaching the challenges of EDI primarily through expressing and spreading belief in their importance will be limited in impact. The toolkit of risk management should be used to bring the structures required for actions that bring about sustained results.
DevOps Delivery: Could your organisation benefit?
Traditionally in many organisations, the development team (from developers and front end designers to quality assurance) works completely separately to the operations team (e.g. system admins) with little to no interaction between the two. DevOps is the practice of bringing development and operations teams together to create a working environment where information flows more freely, and consideration can be given to operations considerations earlier in the development discussion.
BCS Consulting is now part of Accenture
Since 2010, we have been on a journey to grow our reputation for delivering excellence for clients within the Banking, Capital Markets, Insurance and Asset & Wealth Management sectors. During this time, we are proud to have become recognised as thought leaders in our market and built a reputation for delivering complex business change projects that exceed our clients’ expectations and deliver impressive results.
Operational Resilience: Preparing your first self-assessment
The UK supervisory authorities (the Bank of England, PRA and FCA) published policy statements in March 2021 aimed at building the UK financial sector’s operational resilience. These policies followed a lengthy discussion and consultation period (2018-2021) between the regulators and the financial services industry on the ability of individual firms, and the financial sector collectively, to prevent, adapt, respond to, recover from, and learn from operational disruptions.
Leveraging Suspicious Activity Reporting (SAR) reform to better manage financial crime risk
In recognition of the vast growing number of SARs, and the inability to effectively utilise the data within them, the UK in its Economic Crime Plan of 2019-2022 set out its intentions to further reform the SAR regime. This built upon previous commitments from April 2016 in the AML/CTF Action plan and work underway at the Home Office since 2017.
Cyber Target Operating Model
A Cyber target operating model (TOM) is a blueprint of a firm’s vision that is aligned to its operating capabilities and focused specifically on its cyber security function. An effective Cyber TOM enables a firm to effectively defend against cyber security threats and manage any residual risk. This is achieved through ensuring the right people, processes and technology are in place to identify and prepare for the cyber security threats facing the firm.
Open Finance: The Missing Piece of the Open Banking Puzzle?
More than three years on from the UK launch of Open Banking, the service has seen considerable growth. In 2018 there were 67 million API calls; by 2020 this had risen to nearly 6 billion. More than 2.5 million consumers and businesses now use Open Banking services. 2.5 million users is impressive; but it still represents a relatively small proportion of the 50 million people who have a UK bank account.
The U and I in inclusion: Advancing payment services for charities post pandemic
The COVID-19 pandemic has been a global event, during which all countries, entities and individuals have been and continue to be affected. A quiet side effect of the COVID-19 pandemic was the acceleration of societies’ journey to digitisation. The digitisation of every realm of society has shifted our payments habits as we’ve reached for our screens over cash. In fact, the online shift within Banking has surpassed all predictions, with an estimated six million people (12 per cent of the UK’s adult population) downloading a banking app for the first time one month into the first UK lockdown in 2020.
Unlocking the potential of PMO through BI and Data Visualisation
In a world of big data, visualisation tools and technologies are critical to enable the analysis of vast amounts of information to inform data-driven decisions. Programme delivery is no exception, yet central PMO is an area that often gets overlooked when considering visualisation tools to enhance project MI. Having effective, insightful data visualisation is paramount to operating an efficient PMO and we are seeing an increasing shift in both the mindset and skillsets of organisations in adapting to this change.
Open Banking – How to Partner for Success
The last year has witnessed an ever-increasing number of services being facilitated by Open Banking, as more and more FinTechs have moved into the market and registered as Third Party Providers (or ‘TPPs’), which can use APIs to access consumers' banking information. However, this increase in competition is not without its risks for established banks.
Business Readiness: Landing Change in Uncertain Times
Constant change is our reality. For years, banking has been in a state of flux with changing customer demands, banking regulations, technology innovations and market turbulence. No organisation can afford to stand still, but to move forward successfully, organisations need to know how to change effectively, including considering the impact of change on their people.
Lessons Learnt from an IFR EU Go-Live
With the EUs Investment Firm Regulation (IFR) now live as of 26th June 2021, firms are quickly turning their attention to the UK’s Investment Firm Prudential Regime (IFPR) which will apply from 1st January 2022. This presents a great opportunity for firms to leverage key lessons learnt and avoid the challenges faced by their EU counterparts.
FCA Dear AFM Chair Letter Authorised ESG & Sustainable Investment Funds: improving quality and clarity
On 19th July 2021, the FCA published a Dear Authorised Fund Manager (AFM) Chair letter calling firms to take action to address the weaknesses in the quality of ESG/sustainable investment fund applications and to enhance the level of disclosure provided to end investors through the implementation of key guiding principles.
Four steps to overcoming cultural resistance to advanced MI & reporting capabilities
When discussing the value of MI and reporting solutions with clients, we often encounter a common concern: cultural resistance. The benefits of an advanced MI and reporting capability are rarely disputed, but implementing it involves winning over and training up large consumer groups who have grown used to MI and reports being handed to them. We hear that Excel, for all its limitations, is a tested and trusted companion and PowerPoint, despite the manual effort, is a familiar friend.
Digital Credit Transformation
Over the last decade, retail banking has seen a significant investment in building customer centric digital propositions for its clients. However, commercial and corporate banking has not experienced the same breakthroughs improving customer journeys for companies from small and medium size enterprises (SMEs) to large corporates. Unlike in retail lending, the average time to reach a decision can be a few weeks (in some cases even months), with additional weeks added for time to release cash for most commercial and corporate customers (when the funds are actually available).
Sustainable Finance Disclosure Regulation – Are you prepared for the level 2 disclosure requirements?
The Sustainable Finance Disclosure Regulation (SFDR) forms part of the EU Commission's Sustainable Finance Action Plan and introduces new transparency requirements on the characteristics of financial products to allow end investors to compare products based on their environmental or social impact, otherwise known as “sustainability”.
Is Artificial Intelligence really the future of NFR Technology?
Game-changing, transformative, disruptive are just some of the phrases that have been used to describe introducing Artificial Intelligence (AI) in financial services. Indeed, one would be forgiven for believing that financial services firms should already be using AI to manage non-financial risks to great effect, becoming more efficient, getting better use of data and actively identifying and managing the range of risks associated with the technology.
Keeping pace with the cyber threat landscape through continuous control monitoring
The evolving threat landscape is the cornerstone of any discussion on cyber risk – and it appears to be evolving more rapidly now than ever before. The COVID-19 pandemic coupled with continuing geopolitical tensions have created the perfect environment for cybercriminals to flourish, as evidenced by a reported 485% year on year increase in ransomware in 2020.
Climate change: Risk management is critical for business resilience
This blog is the second in our series that breaks down our key findings from our TCFD Global Progress Report for the banking sector, published in March 2021. See our post on first post on climate governance.
The Task-Force on Climate-Related Financial Disclosures (TCFD) has fast become the global standard for reporting climate-related risk and opportunities.
UK Regulatory Landscape: Regulators show signs of sympathy, but for how long?
Regulatory coordination in Financial Services has never been more important. The impact of the pandemic, coupled with the UK exiting the EU, has only heightened the need of having a single view of the UK regulatory landscape. Industry participants have been struggling with the uncertainty involved in regulatory compliance for decades. The requirements for compliance continue to be difficult to decipher, let alone implement within the expected deadlines.
Machine Learning in forecasting: critical investment or running before we can walk?
The COVID-19 pandemic has proven that planning and predicting future outcomes has become increasingly difficult.
Yet in the face of such uncertainty, the Finance function’s forecasts of the future became more in-demand and important than ever, as executives scrambled to understand and react to the likely impact of the pandemic on the bottom-line.
If it matters, measure it: the importance of good quality MI for governance decision making
In 2016, Wells Fargo, a US Bank was fined $185 million dollars for an “outrageous” sales culture. Then in 2020, Rio Tinto, an Australian mining company, inadvertently destroyed Juukan Gorge, a 46,000-year-old Aboriginal sacred site. More recently in 2021, Standard Chartered, a British multinational banking and financial services company headquartered in London, is facing a shareholder revolt after financing carbon emitters which are incompatible with the Paris Climate Agreement.
Cloud’s democratisation of tech means firms need to refocus on their data
As we follow the continuing evolution of cloud product offerings from one year to the next, one thing is clear: they keep getting smarter. The clever people at Google, Amazon, Microsoft and others clearly take their management very seriously, working in close collaboration with customers to understand their needs. Moreover, the sheer scale of their customer base makes them at identifying solution patterns that can be repeatedly applied across many different domains.
Agile in Practice: Prioritising Process over Principles
20 years ago, 17 esteemed software developers met in Snowbird, Utah to propose a new way of developing software “by doing it and helping others do it.” The Snowbird 17 unanimously agreed that organisations were so focused on excessively planning and documenting their software development cycles that they lost sight of what mattered – culture, collaboration, and making customers happy.
A CBDC Taskforce – so what?
The Bank of England and HM Treasury recently announced the creation of a taskforce “to coordinate the exploration of a potential UK Central Bank Digital Currency (CBDC)”, or ‘Britcoin’ as it has imaginatively been called. This received an awful lot of press coverage considering that the press release also made clear that they haven’t yet made a decision on whether to launch a CBDC.
APProaches to Protecting the Vulnerable – The journey to protect vulnerable customers from APP Fraud
Protecting Vulnerable Customers (VCs) is a key focus area for the FCA, with 53% of UK adults displaying at least one indicator of vulnerability. FCA figures point to an increase of 3 million in the number of VCs between February and October 2020 (now an estimated 28 million).
Tactical vs Strategic delivery? Which ISO 20022 method works for you?
ISO 20022 should be seen an opportunity for banks to transform, but not only in payments. With the drive towards digitalisation in the financial industry, importance is being placed on deeper, data-driven insight in banking. ISO 20022 facilitates this through richer data in payments messages, that can filter right throughout a bank’s technology stack.
EU Taxonomy Regulation: Are you ready for the first wave of disclosure requirements?
European regulatory initiatives on Sustainable Finance are progressing at full speed. As part of the broader EU Sustainable Finance Action Plan, EU regulated financial market participants will be required to make their first set of disclosures in line with the EU Taxonomy from January 2022 and throughout the course of the year.
Delivery Leadership: Driving Successful Change
Leadership is critical to delivering successful change. However, it is hard to quantify the value strong leadership brings, and the true qualities of leadership are challenging to define. Conversely, the effects of poor leadership, or a lack of leadership, are immediately obvious and all too familiar. To be successful, complex business transformation initiatives need more than just effective management. Delivery Leadership is critical to ensure that they achieve the underlying business benefits on which they are founded.
Climate Change: Success starts from the top
The Task-Force for Climate-Related Financial Disclosures (TCFD) has fast become the global standard for reporting climate-related risk and opportunities. As the UK looks to ‘build back better’ from the Covid-19 pandemic and regulators strengthen their position on tackling the devastating impacts of climate change, banks can use the TCFD framework to underpin their response and drive the transition to a low-carbon economy. As critical agents in the allocation of capital in the economy, banks are positioned to play a pivotal role in directing the trillions of funds required to meet environmental goals.
Operational Resilience – Summary of UK regulatory requirements
On 29th March 2021, the PRA and FCA released their policy statements on Operational Resilience. Firms have 12 months to implement the requirements before they come into force on 31 March 2022. This will be followed by a transitional period of up to 3 years to allow firms to remediate any vulnerabilities and demonstrate they are fully resilient.
Agile and Regulatory Initiatives
Regulatory initiatives in financial services share many common traits; strict deadlines, complex solutions, the involvement of multiple functions across the organisation, and the risk of significant financial penalties and reputational damage if commitments are not met.
Three “musts” to get value from data science innovations in finance
All financial firms seek innovations that will provide a competitive edge, and the realm of data science and analytics offers fertile ground, driven by the rapid proliferation of 'big data' and machine learning techniques into mainstream business. Gartner predicts that by the end of 2024, 75% of enterprises will shift from piloting to operationalizing AI.
Agile – it’s an adjective, not a noun
Over the past 20 years, software development teams have proven that implementing ‘agile’ frameworks, like Scrum and Kanban, enable them deliver solutions to customers faster, to a higher quality, and with more predictability. Achieving agility at the individual team level is relatively easy; the benefits are clear, and the resources are plenty.
Is Third-Party Cyber Risk Leaving You Exposed?
If we were to look back 5 years ago, we would see many organisations focusing their cyber defence efforts almost entirely on the protection of their own organisation, stopping at the point of securing their network perimeter. Today, however, these same companies are increasingly concerned about third party cyber security.
Open Banking: End of the Road(map)
Banks are coming to a decision point – do they want their Open Banking implementations to cost them money, or to make them money? By the end of 2021, the CMA9 (the nine largest banks in the UK) will have closed out the final stages of the CMA Roadmap and will have met their regulatory obligations. But any banks viewing the end of the Roadmap as “box ticked, job done” will have missed a trick.
How to Avoid a Scandal: Prioritising Quality Governance
“Poor governance and controls” are still being flagged by the FCA as key drivers in causing consumer harm. But given there are several governance regulations in place aiming to prevent this, such as the Corporate Governance Code, the UK Stewardship Code, and the Wates Principles; why is consumer harm still occurring?
Leadership in Uncertainty: The Road to Recovery or to a New Normal?
It is fair to say that 2020 has changed how the world operates. In a relatively short space of time, we have had to challenge ourselves, our workforce, our communities, and our economy by adapting to a new way of living and an enduring sense of uncertainty. This added pressure has undoubtedly affected people’s mental wellbeing, and if anything has become clearer over the last eight months, it is that there is a greater need for communication and empathy in our day-to-day lives.
How to Avoid a Scandal: Embedding SMCR Conduct Rules
In response to the financial crisis in 2008, and recent financial scandals including PPI mis-selling and LIBOR rigging, the UK regulators introduced the Senior Managers and Certification Regime (SMCR) to “reduce harm to consumers and strengthen market integrity by setting a new standard of conduct for everyone working in financial services”. SMCR consequently went live for the banking sector in 2016, for insurers in 2018, solo-regulated firms in 2019 and, lately, benchmark administrators in 2020.
Decision making for the modern manager
By now we are all aware of the power and availability of data, which makes its chronic under-utilisation harder to understand. It is particularly frustrating when readily available data is lying dormant, its effectiveness blocked by lack of know-how, resource or technology to be able to drive intelligent decision-making.
How to Avoid a Scandal: Purposeful Cultures
The financial services (FS) industry has faced scandal after scandal, particularly since the global financial crisis. These have had costly consequences in more ways than one. Many FS firms have paid multimillion-pound fines or reached significant settlements with regulators over the shortcomings in their financial crime risk management1. Between January 2011 and December 2019, £38.3bn was paid to customers who complained about the way in which they were mis-sold PPI.2 Some individuals have even faced criminal charges for their part in the manipulation of interest rate benchmarks.3 Such events all result in reputational damage for the institutions involved.
Show me the money! How to Successfully Manage Safeguarding Arrangements
Safeguarding has been the subject of intensive FCA activity recently, including a thematic review, Dear CEO letters, attestation requests, and restrictions on regulated activity. It was also considered by the High Court earlier this year. We take a look at what’s required and why a straightforward concept can be challenging in practice.
Operational Resilience: More than Mere Compliance
Rising external threats, increasing internal vulnerabilities, an ever-growing dependency on third parties, and the shift to remote working – all of which have been aggravated/accelerated by COVID-19 – have meant that financial services institutions are assessing their ability to withstand severe operational shocks.
It is no surprise, then, that operational resilience is a hot topic – and not just in Risk Management or Business Continuity circles. As well as preparing to meet the incoming regulatory requirements around operational resilience, firms should use this as an opportunity to strengthen and align existing risk and business continuity operating models to ensure that there is no overlap and no unnecessary inefficiencies are added to organisations and their cost bases. Successfully embedding operational resilience practices will enable businesses to derive a number of additional benefits, including offering a more reliable service to their customers, driving business performance improvement, and helping to improve cost efficiencies.
How the rules of Leadership must not be forgotten during a time of crisis
There has never been a more important time to demonstrate the merits of successful leadership than during the COVID-19 crisis. Possession of leadership qualities is frequently confused with being in leadership positions. Theodore Roosevelt once described the difference between the two by saying “People ask the difference between a leader and a boss. The leader leads, and the boss drives.”
Leaders provide strategy, direction, and they give employees the tools that enable them to gather information and make good decisions. Quantifying leadership is not simple, as it is the sum total of various actions that have a meaningful, impactful and profound objective. Effective leadership requires having a vision, executing it and creating impactful change, as well as directing all available resources towards a common goal.
Digital Lending: a must to survive?
‘Digital lending’ is a broad term describing the end-to end management of credit products through digital channels. Target-state digital lending architecture enables borrowers to easily submit credit applications through their device of choice, facilitates automated processing of all the associated identity and credit checks, disbursing the funds and even managing collections – all with little to no human intervention, enabled by advances in technology and data availability.
Credit is at the heart of banking operations. Digitising credit provides considerable benefits to both lenders and borrowers. Lenders can achieve enhanced risk management, revenue protection and growth, and significant cost reductions. Borrowers get on-demand service, faster decisions and more competitive pricing. In this always-on and ever-connected age, having a strong digital proposition is no longer a nice-to-have; it’s a must-to-survive.
Bounce Back Loans: Prepare to be hit by the Bounce Back
The National Audit Office (NAO) has recently released a report on the Government’s Bounce Bank Loans (BBLs, the Scheme) estimating that 35% to 60% of borrowers may default on the loans due to minimal credit checks and fraudulent applications.
BBLs, launched on 4th May 2020, have proven a popular lending scheme with small businesses who required immediate support to survive the COVID-19 Pandemic. The loans of between £2k and £50k were seen as critical for small businesses given the impact of lockdown, and in supporting them would help to reduce the wider economic stress caused by the government’s responses to the Pandemic.
Cyber Maturity Assessments – The importance of optimising your Cyber Security program
The Financial Services sector is subject to increasing amounts of corporate and regulatory scrutiny over how they are managing and protecting their information appropriately. Simultaneously, the threats from cyber criminals are growing in scale and sophistication. This means that organisations need to continually evolve their cyber security landscape to respond to the changing digital environment.
How to Overcome the Barriers to Best Practice BI
Business Intelligence (BI) refers to the practice of using applications, infrastructure and tools to convert raw data into actionable insights. Best practice BI solutions present data in a straightforward, user-friendly way so that it can be used effectively to inform strategic business decisions.
Everyone wants a data hub; few see it pay off. Here’s why.
The idea lies at the heart of nearly every corporate data strategy: "Let’s get all our data in one place. Then we'll be able to discover hidden game-changing insights by joining previously disparate datasets together. Meanwhile, downstream business consumers will get a single, standardised source of truth for all their analysis and reporting."
Ready, Steady…Go! How to Manage Organisational Change Effectively
Change is inevitable, but as human beings, we find managing change extremely difficult. In general, we are creatures of habit and take comfort in knowing what’s next. This reality doesn’t correspond well with the constantly evolving business landscape. In 2020, the need to be reactive and adaptive has become even greater due to the significant business changes forced upon us by COVID-19. In order to react effectively to these changes, meet regulatory requirements, keep up with competitors and ultimately survive in a challenging market, banks reserve large budgets each year for largescale change programmes.
The Accelerating ESG Regulatory Landscape: Gearing Up for Change
The concept of ESG (environmental, social and governance considerations) is not new to financial services, but the ESG landscape has changed dramatically in recent years. From the launch of the UN’s Principles for Responsible Investment in 2006, the focus has evolved beyond voluntary codes to significant regulation at a national and international level. With increased regulatory focus on ESG, the UK financial services industry is expected to comply with several new pieces of legislation in the next few years.
Financial Planning: The Layer Cake
If 2020 and the COVID-19 pandemic have taught us anything, it’s that nobody can predict the future.
And yet, Finance departments of all stripes spend untold hours constructing annual budgets and financial plans which – inevitably – are later painstakingly amended once reality moves on.
So as financial institutions stare down the barrel of this year’s planning exercise, surely it’s time to consider a better way of doing things?
The answer, we believe, lies with the concept of ‘planning in layers’.
SFTR Transaction Reporting – Success Story or Honeymoon Period?
Amidst the global macroeconomic issues and challenges of adapting to new ways of working during the pandemic, one good news story of the summer has been the successful go-live of transaction reporting under the Securities Financing Transactions Regulation (SFTR). With the initial phase deferred by three months from April, mid-July saw the implementation of reporting for the sell-side along with Central Securities Depositories and Central Clearing Counterparties, with the next phase for buy-side firms due to go live in mid-October.
Across the four registered Trade Repositories (TRs), it’s been reported that well over 90% of transactions have passed validation checks. That is a considerably high number for a new regulation and arguably sets SFTR on the path to being one of the smoothest regulatory implementations the industry has seen.
ISO20022 – Interoperable or not-so-standard?
Over the course of the next three years, the payments industry will undergo a substantial transformation as we see different regions and financial market infrastructures across the globe go-live with the ISO20022 messaging standard. As with any implementation (generally, but especially one of this size), discussions will take place around what is a must-have versus what is a should-have for organisations. It is in this sliding scale between strategic and tactical change that we have the question of just how many of the proposed benefits of ISO will be realised.
Future-Proofing your Information Security: How to Work from Home Securely in a Crisis
Faced with the global outbreak of COVID-19 earlier this year, banks were forced to act quickly to enable remote working for much of their workforce almost overnight. This reactive approach has not come without its information security risks. Customers placing greater reliance on remote banking services, combined with organisations’ rapid procurement of collaborative tools to maintain virtual communications and high numbers of staff absenteeism due to the pandemic, have left many organisations stretched, vulnerable and ill-equipped to deal with cyber-attacks.
UBOs: How to effectively manage the risks
The misuse of corporate vehicles to facilitate the flows of illicit funds or place a veil over criminal activity is a long-standing financial crime typology. In attempts to address this, successive upgrades to Anti-Money Laundering (AML) legislation and regulation have raised the bar for financial institutions with respect to understanding who owns and controls their corporate customers.
Portfolio Management – Change the way you change
Financial services firms, whether large or small, will always have a significant change agenda; derived from the constant stream of new regulation imposed on them coupled with their own wish list of discretionary change programmes. To ensure successful outcomes, it’s imperative that organisations have the right level of governance and oversight in place to deliver these initiatives, on time and within scope.
It’s Not About the Money – Conduct Risk in the LIBOR Transition
Few scandals have hurt the reputation of the banking industry as severely as the manipulation of the benchmark interest rate LIBOR. This behaviour damaged the integrity of LIBOR to the point where trust could not be restored, and complete cessation of the rate was deemed the only solution. Thus, regulators have mandated that LIBOR, the main interbank lending rate for 40 years, will not continue after 2021 and will be replaced with alternative ‘risk-free’ reference rates (e.g. SONIA for the sterling market). This will result in a fundamental change to the day-to-day operation of financial systems.
PRA Dear CEO letter: Managing climate-related financial risks
The COVID-19 crisis has been dominating the agenda of CEOs over the past months, but climate change represents another impending challenge for which action cannot be delayed. On 1 July 2020, CEOs of PRA-regulated firms received a letter calling on them to take swift climate action. In the letter the PRA confirmed expectations for firms to fully embed their approaches to manage climate-related financial risks, as outlined in their Supervisory Statement 3/19 (SS3/19), by the end of 2021.
SMCR – When are ‘reasonable steps’ reasonable?
Senior Managers within financial services firms now need to comply with the Senior Managers & Certification Regime (SMCR). This means they have a duty of responsibility to prevent, stop and remedy regulatory breaches within their areas of responsibility and need to take ‘reasonable steps’ to discharge their accountabilities and evidence that they have done so. Which begs the question – when are ‘reasonable steps’, well, reasonable?