When you have to be right, right now

In-Memory Compute Grids (IMCGs) allow banks to process data faster and more accurately, too. Richard Bennett, Vice President of Regulatory Reporting for EMEA in Wolters Kluwer’s Finance, Risk and Reporting business, examines the latest trends banks need to consider.

You’re limping through the desert, dying of thirst, when you come upon an oasis with what appears to be a bottomless well. You can’t believe your luck. Then you drop the bucket in and discover that the rope tied to it is so knotted and twisted that it stops short of the water line. By the time you straighten it out so that you can take that desperately needed drink, it may be too late.

GFRC: Bringing critical functions together

Post-mortems of the financial crisis concluded that certain practices had infected banks with a near-fatal case of myopia. Each segment, or silo, within an organisation – whether a business or product line, geographic jurisdiction or category of risk – was the master of its own limited domain; no one was clearly and unambiguously responsible for assessing the big picture as far as risk and performance were concerned. A holistic approach to Governance, Finance, Risk and Compliance (GFRC), can help banks looking to combat antiquated organisational structures and technology, adapt to the new regulatory landscape.

Foremost among the responses to the financial crisis was Basel III, the governance guidelines proposed in 2010 by the Basel Committee on Banking Supervision, revised and expanded since then and in the process of being implemented worldwide. Beyond Basel III, institutions must contend with European Union initiatives, including the latest iteration of the Capital Requirements Directive (CRD IV); the Markets in Financial Instruments Directive (MiFID), for investment services; the European Market Infrastructure Regulation (EMIR), covering derivative instruments, etc. Firms are also implementing principles revised by the International Accounting Standards.

BCBS 239 compliance: A catalyst for effective change

It’s the end of May 2016 and as the BCBS 239 deadline is now five months overdue, banks are still asking what approach towards compliance will prove to be the most effective. Some banks have taken a methodical and timely ‘check-the-box’ approach whilst some have viewed the regulation as an opportunity to thoroughly strengthen their underlying governance, architecture and data quality.

To first understand the logic behind both strategies, it’s worth revisiting what the regulation is and how it came to be. Back in January 2013, the Basel Committee on Banking Supervision published the BCBS 239 principles for effective risk data aggregation and risk reporting, in response to the lessons learned during the 2007 global financial crisis.

A vision of the future - and it has to be near term if you want to compete

Immediately following the 2008 crash we should have been at the peak of regulatory change. Indeed, there were some very rapid responses, such as the 2009/2010 UK liquidity regime.  The mountain of reform needed was far greater than initially understood, ranging from structural change to Basel III.

As a result of the size of the change needed, it has been slower. Bank business model changes have arisen as a result of the redefinition of capital, the meaning of high quality and, of course liquidity. In addition, the amount of capital reserves and liquidity have increased.  But now that Basel III is largely in place, is the avalanche over? 

How to mitigate cyber risks

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One of the focal points at the SIA Expo conference in Milan was cybersecurity. Coen Voormeulen, chairman of CPMI (formerly CPSS), the cybersecurity working group at the Bank of International Settlements, kicked off the discussion by suggesting that 'cybersecurity threats are evolving' and that 'they can come from a variety of sources'.