The financial services industry relies more on information technology than any other sector. That makes perfect sense given the high-speed and detail-oriented nature of the industry. Unfortunately, it’s costing a lot more to protect and maintain financial data these days.
Banks are spending $20 billion on compliance in an effort to combat money laundering, yet only one per cent of illicit financial flows are seized by authorities every year. While regulations have been introduced to crack-down on money laundering, so far they have had a limited effect.
For European banks, regulations (GDPR, MiFID II, PSD II, Open Banking) are aligning at a time when they are already warding off digital disruptors intent on wooing customers with convenient, cutting-edge technology-based offerings. Financial institutions that adopt a wait-and-see approach will likely lose ground in a rapidly changing financial landscape, but those who adapt and maximize their formidable advantages will prevail.
Next year, investment firms in the European Union will be confronted by a new prudential regime, courtesy of the European Commission, that is so sweeping, it could cause some to rethink what client activities they engage in. Now is the time, for smaller firms, to take a close look at their operations under the light of the regulations and begin to prepare.
The Markets in Financial Instruments Directive II (MiFID II)—a major package of financial reforms for European markets—is due to be introduced at the start of 2018. The new rules are aimed at providing considerably more protection for investors
You would have to be living with your head buried in the sand not to realize that we are witnessing the Fourth Industrial Revolution, of which the Blockchain Revolution is an integral part. The necessity of working with digital assets is forcing the reinvention of traditional financial infrastructure, and only those banks that adapt and participate in the metamorphosis are sure to capitalize on the generous rewards.
The intensifying interconnectedness of countries around the world has its benefits but also leaves nations vulnerable to the potentially detrimental effects of not only financial meltdowns but also regulations imposed by foreign entities. The EU’s soon-to-come MiFID II is already causing consternation in the United States, especially as the new regulations relate to US investment firms.
Brexit negotiations continue, but little headway has been made regarding the final terms of the United Kingdom’s departure from the European Union (EU).
The UK’s upcoming divorce from the EU will not come without costs, and no matter what the eventual scenario, those costs will be substantial and far-reaching, on both sides of the fence. UK banks already have a lot on their plates in the form of new-regulation compliance, but it is now or never to prepare for EU-27 inclusion after March 2019.
Financial institutions in the UK are waking up to the inevitability of Brexit, and thus they are beginning to budget for contingency plans, especially after the Bank of England requested that banks submit their plans for a hard exit. Planning ahead now is certainly prudent, as not doing so is guaranteed to leave banks struggling to cope with new regulations and changing market conditions.