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.
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?
Route 166: How to navigate a Section 166
In the first quarter of 2020, 24 Section 166 notices (s166s) were issued by the FCA. This is over double the average issued per quarter in 2019 (FCA Number of Reports Commissioned). The sharp rise in s166s can be attributed to two main factors: the FCA’s effectiveness in focusing financial services firms’ attention on high-risk issues, and the publicity and media attention that can also accompany their publications. The impact of the COVID-19 outbreak on individual investment portfolios, pensions and lending has also prompted regulators to issue s166s to ensure firms are taking steps to mitigate the financial impact caused by the crisis.
Unlocking the potential from Non-Financial Risk Management Frameworks
Non-financial risk management frameworks, (including the coverage of; Operational, Financial Crime, Regulatory Compliance, Conduct and Reputational risks), provide an organisation with the structure, processes, methodologies, and tools required to understand and manage their risks and controls effectively.
Insurance Product Value: An Opportunity for Redemption?
The COVID-19 pandemic has had a significant impact on the business community across the globe. Due to lockdown measures imposed to control the spread of the virus, a significant number of businesses have lost revenue due to closure, a lack of consumer demand or staff unable to attend work.
Through the looking glass: Why aligning regulatory permissions is key to unlocking profits in an increasingly uncertain economy
2020 is an unprecedented year for business. The global COVID-19 pandemic has decimated economies worldwide and with Brexit looming, the future for UK business is unclear. Just as Alice fell into Wonderland in Lewis Carroll’s Through the Looking Glass, we have fallen down an economic rabbit hole where nothing is certain and everything is possible.
Real data leaders focus on the people, not the data
Good data management has never been more important to the success of modern business. Covid-19 aggressively accelerated firms’ transition to a fully digitised workplace, in which organisations’ effectiveness in sharing information between individuals, teams and functions is now a critical differentiator for success. Likewise, digitisation of the customer experience has gained pace, increasing the commercial opportunity around capture and analysis of behavioural data.
Even in challenging times, changing payments is the only constant
During the most difficult of times, there is arguably nothing more critical to the economy than to keep money moving securely: to families whose finances have been put under immense strain; to businesses whose doors are shut and whose orders have dried up; and between financial institutions who are rushing to offer credit and liquidity lifelines. During the COVID-19 pandemic, Payments providers have seen their business continuity plans put to the ultimate test.
Why COVID-19 demands a review of your Technology and Cyber Security Risk Management
The COVID-19 outbreak has had an immediate effect on Financial Services (“FS”) firms, transforming how their employees work as much as the ways in which they are able to interact with customers, partners and third-party providers.
Has COVID-19 shown retail banks the art of the possible?
To ensure critical services are provided throughout the COVID-19 crisis, retail banks have accelerated the pace of digital transformation and shown that when the motivation is right, they can deliver change quickly. What can banks do to make this the new norm?
Business Intelligence: Has AI called checkmate on human decision-making in Financial Services?
In 2018, two very different chess AI programmes played one another. One, called ‘Stockfish 8’, had been programmed with 400 years of human chess grandmaster games. The other, ‘AlphaZero’, was programmed with the rules of chess and allowed to play itself for four hours, with no human input, relying only on machine learning to develop its strategies. The chess and AI worlds held their breath as a titanic tussle looked guaranteed.
ISO 20022: Financial messaging for this generation
Payments data is processed by thousands of systems, every second of every day. From a customer perspective, this is usually seamless and works well. However, numerous conventions exist for how payments data is processed between and within organisations, adding complexity and hindering interoperability. An efficient, modern, standardised approach has been lacking, but for good reason – it would be extremely complex and costly to implement. The time for this complex implementation, however, has arrived in the form of ISO20022.
2020 Vision – The Distributed Operating Model
The coronavirus pandemic and a look at the world in 2020 paints a picture that differs greatly to the vision of L.S. Lowry in 1959, which was one of a factory scene, depicting the world when it was seen ‘Going To Work’.
In fact, what has happened to many financial services organisations in the first quarter of the new decade, is that employees have now been forced to go home, or work from a variety of distributed locations.
Whether this was a welcome or a forced evolution is up for debate, however in many cases, the distributed operating model is now a practical reality for many organisations.
And what’s more, the last few weeks has proven to many firms that as a model, it works.
Forecasting in uncertainty: how to get ahead of the next crisis
We live in an uncertain world. The sudden and unexpected breakout of covid-19 has shone a light on financial institutions’ financial planning and forecasting capabilities, as they scramble to react to a global crisis, and anticipate the impact on their financial performance. More than ever, the Finance function is looked to by the rest of the organisation to provide on-demand information and accurate forecasts for rapid decision making.
Four key words: Accountability; Resilience; Cleanliness; and Fairness
The FCA published its 2020/21 Business Plan on 7 April, setting out its priorities for the next one to three years. The relative brevity of the document compared to previous years is immediately noticeable. This likely reflects that the FCA has significantly re-arranged its book of work and resources, in light of the ongoing COVID-19 pandemic. In fact, the Business Plan includes a dedicated section on COVID-19 which sets out the difficulty the FCA has had in planning ahead, and that it may not be able to fully focus on its stated priorities until the pandemic abates. Although the Business Plan contains less depth on sectoral priorities and cross-cutting work than in previous years, the FCA has said that it may publish an updated plan, once stability returns.
Change your risk culture to make your framework work
In the decade following the financial crisis, operational risk management has become a key topic, concerning senior management and regulators across the financial services industry. We have seen substantial losses and fines, as well as regulatory focus on specific subsets, such as Conduct (e.g. PPI and LIBOR), data security (GDPR), individual accountability (SMCR) and service disruption (Consultation Papers on Operational Resilience).
Shifting sands: Financial Crime Risk Management for Wealth and Asset Managers
Those who seek to launder illicit funds, finance terrorism, circumvent financial sanctions, commit fraud and/or evade tax are employing increasingly sophisticated methods. The Wealth and Asset Management sector is not conventionally used to transfer assets or value and has therefore historically posed lower inherent financial crime risk. However, the growing maturity of controls in higher risk sectors is pushing criminals to exploit less traditional paths, including Wealth and Asset Management.
Resilience in the face of COVID-19
Coronavirus (COVID-19) has impacted our daily lives on a blockbuster scale. Governments are mandating behaviour, cities are in lockdown, hospitals are in overdrive, individuals are isolating themselves and businesses are having to adopt a sustained crisis management mentality.
How Can Asset and Wealth Managers Take Advantage of Open Banking?
Open banking has arrived, but why should asset and wealth managers care? The second Payment Services Directive (PSD2) means that financial institutions across Europe have had to provide consent-based access to current accounts, certain savings accounts, and business accounts via application programming interfaces (APIs). Given there is currently no mandate for this access to be required for investment portfolios and pensions, the immediate impact on asset and wealth management has been limited. However just because there is currently no regulatory requirement, does not mean these firms should rest on their laurels. There are opportunities to take advantage of this new ecosystem, and the reality is that new challengers will use this space to erode the client base of traditional asset and wealth managers by acting first and fast.
SFTR Transaction Reporting – The clock is also ticking for the buy-side
With limited time before the initial go-live for SFTR transaction reporting in mid-April, the firms impacted as part of this Phase 1 (sell-side) should now be executing their testing activities. However, given ESMA’s final reporting guidelines were only issued in early January, there’s still significant work required by some parties before readiness can be assured. The final guidance included some significant clarifications and changes covering report type sequencing and scope applicability to branches of third country entities and AIFs (Alternative Investment Funds).
Relocation Relocation Relocation: Driving benefits from an office move
Moving or opening a new office is a challenge which all organisations will likely face at some stage. Cost pressure, globalisation and shifting demographics have caused financial services firms to increasingly review their location strategy. BCS is now seeing demand for experienced project and change management practitioners to deliver such projects, ensuring they are run effectively and efficiently. For complex financial services institutions, moving office must start with a critical understanding of its key drivers in order to be successful; including financial, strategic, technological, risk, and cultural motivations. Without this, challenges with the location, design, cost, vendors and staffing will become evident in future.
Promoting diversity and inclusion is the best way to improve your conduct MI
Financial services organisations have worked for many years to improve their conduct towards customers and markets. Firms have also taken steps to improve their employee diversity and inclusion. Each of these topics faces ongoing challenges which can be better resolved by taking a combined approach.
The Payments of the Future: Shaping Tomorrow’s Payments Ecosystem
The last 20 years has seen a phenomenal shift in how payments are made. Customers were used to physical payments; this moved to digital payments and even further into virtual payments. Technology continues to surpass our expectations. Regulation isn’t just about reporting and risk, it’s about competition and wider access. And whereas payments used to be about back office operations, it’s now at the heart of fintech innovation and bank strategy.
LIBOR – Stepping up the rate of change
For more than 40 years the financial services industry has relied upon interbank offered rates (IBORs) as a reference rate for certain variable-rate financial instruments. This includes the London interbank offered rate (LIBOR), which is calculated based on daily submissions from selected panel banks, and provides a measure of the average rate at which banks are willing to borrow wholesale unsecured funds.
Cost Allocations: From sending cost to saving it
As we begin the 2020s, we’ve now an entire decade between us and the financial crisis that almost collapsed the global financial system. Whilst the established financial order survived – barely – that 21st century Wall Street Crash moment, it’s struggled to thrive ever since
Task Force on Climate-related Financial Disclosures: who has signed up and why should you?
The Task Force on Climate-related Financial Disclosures (TCFD) was formed by the Financial Stability Board (FSB) in December 2015 in response to a request from the G20 countries to better understand the financial risks posed by climate change. The TCFD’s main objective is to develop voluntary and consistent climate-related financial disclosures, and the final recommendations, published in June 2017, set out a framework which standardises the disclosure of climate change costs, risks and opportunities for organisations across the world.
The international bank branch operating model
International bank branches are exposed to a contentious set of demands from a variety of internal and external stakeholders. Regulatory reviews originating from multiple regimes, requests from the parent organisation (i.e. group or head office) and an ever-evolving market environment, all require the branch to perform a complex balancing act.
Operational Resilience: no time to waste
Last week, the UK regulators published the much-awaited Consultation Papers on Operational Resilience. The PRA and FCA published CP29/19 and CP19/32 respectively, both titled Building Operational Resilience: impact tolerances for important business services. The Bank of England also issued three Consultation Papers focused on building the operational resilience of (i) central counterparties, (ii) payment system operators and specified service providers and (iii) central securities depositories. In this blog post, we set out why these papers are so welcome and what financial services firms should be doing to address any gaps in their Operational Resilience frameworks.