Should a bank be required to cover losses arising from fraudulent transactions perpetrated against its customer? The 2019 decision of the UK’s Supreme Court in the Singularis v Daiwa litigation sheds light on the responsibility financial firms accept if they process illicit payments that harm corporate clients, even when the payment requests originated from within those clients. Key to understanding the bank’s duty of care owed to its customer is the standard set by the ordinary, prudent banker.
The COVID-19 crisis has imposed new requirements on banks. Social distancing necessitates that employees work remotely, rendering a bank more vulnerable to cyber-hackers. A bank’s culture has never been more critical than it is now at every level of the hierarchy. From the top down, employees must be guided by company values, by the goal of doing their jobs right. How can management avoid new crises through lapses in culture?
Despite claims from bankers to the contrary, data confirms that a gender-financing gap exists, especially in MENA countries, generating a drag on their economies. Female entrepreneurs are often more successful than their male counterparts but face more barriers to credit. The data highlights the problem but also the opportunities that banks are needlessly missing by not working more closely with female entrepreneurs, who have proven they are good for business.
Small and medium-sized businesses need reliable lenders, but they are often viewed warily by credit institutions. That could provide an opportunity for Big tech that use alternative data to credit score SMEs and help them optimise their financial performance. However, it is banks that will be the future of SME funding because they have financial data, can guarantee data privacy and have no conflicts of interest with their clients.
Global upheavals on the scale of COVID-19 inevitably change “business as usual” permanently. Once the lockdown lifts, the reboot will begin, but how will it look? New approaches to evaluating risk and return will be needed to traverse the new financial landscape and efforts to scale up investments to reach the targets of the Sustainable Development Goals even more critical. How we approach the challenge and build sustainability into the recovery plans will be of great consequence and essential to improving resilience against future global threats.
While COVID-19 is decimating some industries, it is giving a boost to others, including the employment of artificial intelligence in the banking industry. As customer access to human staff is curtailed with disruptions such as branch closures, well-configured chatbots and virtual assistants are stepping up to the plate. And the banks that are best equipped for AI implementation are enjoying such advantages as cost savings along with improved customer experience.
New Rules for International Banks that Provide Cross-Border Financial Services in Switzerland or Produce Financial Instruments for the Swiss Market
Switzerland has long been a financial hub for international banks, but regulations have stiffened in recent years. The new Swiss Financial Services Act that came into effect on January 1, 2020, has tightened the noose further. What do banks that provide financial services in Switzerland and/or provide financial instruments for the Swiss market need to know to negotiate safely the duties and obligations that the new law requires of them?
Often we turn to history for answers to questions arising from crisis, but with the COVID-19 pandemic, there are few models to which to refer. From an economic standpoint, there are more uncertainties than certainties, especially regarding the duration and what life will look like in the post-crisis “normal”. One thing is sure: recession has spread to every corner of the earth, and it is likely to be without precedent.
An Updated Bank Secrecy Act/Anti-Money Laundering Examination Manual and the Implications for Your Financial Institution: Additional Guidance, or New Areas of Regulatory Risk?
The COVID-19 pandemic has not released financial institutions from their obligations to deal with money-laundering and terrorist-financing risks within their operations. In mid-April, the US FFIEC released its updated BSA/AML Examination Manual, geared for examiners who are assessing a bank’s compliance. Even though the Manual was not written directly for them, banks would be wise to familiarize themselves with its standards and requirements to ensure they are up to speed.
If there was ever a time for banks to rise to a challenge, it is now, as COVID-19 ravages the physical and financial health of millions. The Great Recession, created largely by banking malpractice, prompted positive changes in banking but revealed serious shortfalls in customer service. This time around, can banks stand behind all of their customers, provide crucial aid wherever needed and offer much-needed hope for a better future?