Consultancy.uk, the leading online platform for the consulting industry in the UK, has published an article on the GDPR regulation where Paul Nielsen, our Senior Consultant, shares his opinion on the adoption and the involved trade offs. The article can be found here.
Our View on Preparing for GDPR on Consultancy.uk Weiterlesen »
Last year, 52% of the British population voted in favour of leaving the European Union, a historic and unexpected event known as ‘’Brexit’’. Brexit is said to have complicated and long-term impacts on the financial services sector in the UK since companies will no longer be able to operate within the European framework. This could potentially block access to clients and significantly interfere with business. London’s lead location as the core of the financial services industry is also under severe pressure. With Brexit, the race to become the new London has started and cities like Amsterdam, Paris and Frankfurt are lining up for the position. An interesting appearance amongst the large digitalised cities is Amsterdam. Big financial players such as Mitsubishi UFJ Financial Group (Japan’s biggest bank) and Royal Bank of Scotland are set to move their operations to Amsterdam. The big move towards Amsterdam has to do with the possibilities the city offers for Fintechs, clearing houses and high frequency trading. The digital connectivity of the city, its geographical location and that it already has a financial sector is another plus. The Netherlands also has strong insurance and pension sectors and big data storage centres, which can be interesting to large businesses. Apart from advantages, there are also numerous challenges. The Dutch financial world is still suffering from the 2008 financial crisis, which has led to continuous bank layoffs. The size of Amsterdam’s financial sector imposes another problem: it is simply too small to make it an interesting location for big banks. Another disadvantage for Amsterdam is the high corporate tax rate. This disadvantage is however being addressed by the recently published coalition agreement by the Dutch Government. The agreement increases the competitive advantage against other European cities by lowering corporate income taxes and the removal of the infamous Dutch dividend tax. Amsterdam is overall not the first choice for a potential post-Brexit city due its financial character and size. It can however function as an interesting hub that is part of a bigger network of cities that attract specific financial services sectors. This way, the city could continue to focus on its strengths, which are innovation and digital connectivity without the weight and responsibilities of the core of a financial heart. There is still a lot of on-going turmoil surrounding Brexit. For that matter, the European Banking Authority (EBA) has published an opinion paper, providing guidance to authorities and institutions on Brexit relocations. For the complete press release, please click here.
Amsterdam: The Next Post-Brexit EU City for Financial Services? Weiterlesen »
Trade finance is going through a technological revolution. There are a handful of financial institutions attempting to incorporate Blockchain technology applications in the trade finance process. This way, banks can increase the cross-border financing to SME’s and bloom their businesses. The promise of the Blockchain is that it has the ability to streamline the trade finance process and that it has the potential to achieve full transparency in the supply chain. Still, there are challenges that need to be addressed. In the positioning paper ‘Blockchain: The key to Trade Finance Challenges’, we discuss such challenges as well as how Blockchain’s implementation frameworks create solutions for trade finance. To support this, we use relevant case studies.
Blockchain: The key to Trade Finance Challenges? Weiterlesen »
The European Banking Authority (EBA) has published today its revised Guidelines on Internal Governance. These Guidelines aim at further harmonising institutions’ internal governance arrangements, processes and mechanisms across the EU, in line with the new requirements in this area introduced in the Capital Requirements Directive (CRD IV) and also taking into account the proportionality principle. Effective internal governance is fundamental if individual institutions and the banking system as a whole are to operate well. For the complete press release, please click here.
EBA Publishes Guidance to Further Harmonise EU Banks Internal Governance Weiterlesen »
Since December 2014, The World Economic Forum has strived to understand the impact of potentially disruptive Fintech technology innovations on the financial services ecosystem. They have presented their findings in three phases. Phase one ‘The Future of Financial Services’ discusses the potential of new innovative entrants, while phase two ‘The Future of Financial Infrastructure’ aims to illustrate the role of how financial infrastructure is going to enable the future of financial services. The third phase ‘Beyond Fintech’ is focussing on financial services sectors and areas that are slowly being reshaped by Fintech in a world where innovation technologies merge together. Fintechs can be defined as small, technology-enablers, entering and disrupting the financial services sector. The main aim of their existence is to overtake the financial services market. Even though Fintechs failed to become a dominant player due to scale and customer adoption struggles, they have managed to change the competitive landscape of the sector. First off, the wind of Fintech change gained tremendous strength in the payments, insurance, digital banking, lending, investment management, equity crowdfunding and market infrastructure. Additionally, Fintech is becoming the foundation for future disruption in multiple areas: Cost commoditization Profit redistribution Experience Ownership Platforms Data Monetization Bionic Workforce Systematically Tech Firms Financial Regionalization The impacted areas and sectors illustrate the astonishing speed of Fintech innovation developments. The last World Economic Forum report concludes how Fintech unleashes a new era of competition, innovation and job-creating productivity in the financial services sector. The original document can be found here.
The Rise of Fintech in Financial Services Weiterlesen »
A new era of automated mechanisms is set to disrupt how businesses, institutions and the government work. One of such technologies is the Blockchain and it’s said to impact current values and means of participation in our society’s financial and governmental systems. Blockchain: how it all started and widening its context As applied in the Bitcoin context in 2009, Blockchain is a decentralised ledger where information entering the technology is securely stored and recorded amongst a global network of computers. Third parties like banks, clearinghouses or middlemen are not required for completing transactions, which makes Blockchain a trusted carrier. This feature alone is game-changing for the financial services industry and insurance, trade finance and healthcare businesses. The distributed ledger could prove to become a broader changing force and improve transparency and integrity in today’s society systems and how businesses and the government work. Not to forget that all types of transactions can be processed by the technology. Think of documenting digital asset transfers, recording the ownership of intellectual property or establishing rights through smart contracts. In this way, Blockchain is cost-effective and enables businesses to operate both faster and more cheaply. The Financial Services industry responds to the Blockchain trend A growing belief in the technology is reflected in investments trends. There’s significant venture capital Blockchain start-ups and Fintechs in the financial services industry are more than willing to invest (a spending of $20 billion was detected from 2013 – 2015 alone), which puts even more pressure on banks in terms of limited Blockchain growth opportunities. The Blockchain is feared by many in the financial sphere because it democratises value and current legacy and changes the way consumers behave and how intellectual property is organised. Other areas and applications that receive a great deal of attention are trade execution, asset exchange, physical asset registration, supply chain management and cash reserve management. Blockchain’s substitutive power is why banks are doing everything to hop on the Blockchain train. They invest money in innovative technologies and reassess business models – but is this enough? Act, don’t sit on the side-line Change takes time and so do financial institutions need time to adapt to Blockchain and get a grip of its benefits and risks. Whereas only a few can afford to sit on the side-line, many businesses need to actively participate in the ongoing innovation cycle. They need to understand how Blockchain is shaping the sector and how to pursue opportunities as the financial landscape converges and evolves. Banks and financial institutions will be challenged during the Blockchain revolution. It is not so much about finding solutions but about identifying complex problems that require a Blockchain way of thinking. Businesses that will prosper are the ones that act fast, take advantages of new opportunities and harness the Fintech and Blockchain revolution. The original document of The World Economic Forum can be found here.
The Potential of Blockchain and its Expanding Scope for Changing Society’s Systems Weiterlesen »
On August 31st, 2017, The Basel Committee on Banking Supervision (BCBS) released a consultative document on potential fintech implications for banks and its supervisors in the Financial Services sector. The paper explains how innovative financial technologies disrupt the financial sector, specifically in the banking industries. BCBS assesses the impact of fintech products and services with the help of five ‘forward-looking’ scenarios: The better bank: In this scenario, incumbent banks digitalise and modernise their current business models to retain customer relationships and their leverage to enable innovative technologies. The new bank: Incumbents are replaced by banks driven by innovative technologies because they cannot keep up with the disruptive power of finetchs. The distributed bank: Banks in the financial services fragmentise among fintech firms and banks. The only way for them to prosper is to carve out a specific niche. The relegated bank: Incumbent banks become commoditised service providers and customer relationships are owned by fintech and bigtech companies who function as intermediaries. The disintermediated bank: Banks have become irrelevant as customers directly interact with individual financial services providers. The paper argues that fintechs are going to stir up the financial sphere, which is why rapid adoption that enable fintech technologies need to be developed and implemented by incumbent banks. Standards and supervisory activities imposed by banks should meet all necessary expectations and should be adapted according to prudential standards. In line with these standards, BCBS set out 10 key observations and related recommendations on supervisory issues. The Committee welcomes feedback on the content of the paper which is currently in its review phase. All comments on the proposal need to be submitted before October 31th 2017. The original document can be found here.
An increasing number of financial service institutions are introducing an Agile way of working as a formula for a greater chance of success. Financial insitutions are aiming to adopt the trend eversince it was introduced. Agile is said to have great benefits in terms of increased innovation pace, competitive business, mobility and flexbility, reduced costs and improved productivity. Apart from advantages, Agile also has its drawbacks. The most challening part for financial insitutions is implementing Agile development schemes while also having to considering the operational functions. In ‘Change Management Agile Roll-Out’ we dive into the components of Agile and we also give solutions for succesfully implementing the Agile concept in the operational functions using a Change Management framework.
Developing Agile into Operations – A Change Management Approach Weiterlesen »
The Basel Committee on Banking Supervision is revising methodologies for the determination of capital requirements. While rules introduced by Basel III increased the amount of capital that banks must hold, recent developments proved that even stricter rules should be applied. This is where the Basel IV framework was introduced. In ‘The evolution of Basel IV: implications and implementation challenges’ we solely focus on Basel IV, i.e.: its original foundations, the challenges under Basel III and the current Standardised approach, capital requirements for each of the revisions, timelines, implementation challenges and overall implications.
Basel IV: The Evolution Weiterlesen »
On 29 June 2017, the Basel Committee on Banking Supervision (BCBS) published a consultative document on a simplified alternative to the standardised approach to market risk capital requirements. The simplified approach to market risk capital requirements is aimed at financial institutions which are less active on an international scale and not large in nature. The alternative set out in the BCBS proposal includes a simplified approach to the sensitivities-based method (SbM), which is the main component of the standardised approach. The revised Sb method includes: The removal of capital requirements for vega and curvature risks; Simplification of the basis risk calculation method; and A decreased risk factor granularity and correlation scenarios to be applied in the associated calculations. The revised SbM will be subject to supervisory approval and oversight, and will only be available to financial institutions that meet specific qualitative and quantitative requirements. As an alternative, the Committee also seeks feedback on whether retaining a recalibrated version of the Basel II standardised approach to market risk would better serve the purpose of including a simplified method for market risk capital requirements in the Basel framework. To conclude: BCBS’ proposal of the alternative standardised market risk approach is still in its review phase and all comments on the proposal need to be submitted before September 27th 2017.
