Compliance and cyber drive agenda at SWIFT Business Forum London
Opening the fourth annual SWIFT Business Forum London on 29 April Alderman Fiona Woolf, the 686th Lord Mayor of the City of London (and the first woman to hold the post), addressed a packed plenary room at London's The Brewery. She welcomed delegates, who had turned out in record numbers despite the travel challenges created by a 48-hour strike on London Underground. She then highlighted the relevance of the theme for the forum - Doing good business in an era of re-regulation - as "one that captures the challenges we face, but also hints at the opportunities as well".
Arun Aggarwal, Managing Director, UK, Ireland & Nordics, SWIFT, elaborated further on the theme. For London's financial services industry, "doing good business" means "being compliant in both letter and spirit, achieving appropriate, quality earnings and being valued and responsible", he said.
Business journalist Paul Lewis then moderated a lively opening panel on financial crime compliance (), during which Tracey McDermott, Executive Board Member at the Financial Conduct Authority (FCA), made it clear that still too often the basics of fighting financial crime are not performed well enough. "Where we see that things are wrong, we will intervene and have done so," she warned, but she added: "As regulators, we do need buy-in from you, the industry."
Following a series of dedicated business streams and special interest sessions (see boxes), the SWIFT Business Forum London 2014 was brought to a conclusion by a session on cyber security. SWIFT Chief Information Officer Mike Fish reflected the prevailing view of how to deal with the shifting cyber landscape.
More collaboration is needed to tackle the many challenges identified during the forum - as well as to capitalise on the many opportunities - Alain Raes, Chief Executive, EMEA and Asia Pacific, SWIFT, reminded delegates in his closing remarks, before thanking them for battling through the tube strike to join the event.
Dedicated business stream - Compliance
Fighting financial crime: solutions for compliance
Accuracy over-riding priority. Legacy systems a challenge: ideal is one defined technology architecture and a single data management strategy - not split by geographies/business lines. Collaboration can help - though utility solutions have challenges due to varied organisational structures and risk appetites.
On the alert: mining big data for compliance
Big data useful for identifying areas of concentrated financial crime and feeding that into driving business strategy. Because financial services was early adopter of technology we think there are barriers where there are not. Not difficult to gather, analyse large, disparate groups of data. Other industries see no barriers.
In the spotlight: shadow banking
Regulators increasing focus on financing in quest to shed light on shadow banking. Repo market is ‘shrinking' as a consequence - ironic since it held up well during the crisis. Is the regulatory focus on repo justified? Could a new emphasis on FX take the spotlight off repo?
Dedicated business stream - Investors
T+2 settlement: the impact on investors
Larger firms have the IT systems and processes to move to T+2 without great difficulty - but what if rest of the community not ready by the deadline? Currently unclear what's in scope/out of scope on a country by country basis. T+1 a step change too far?
The regulation challenge: outsource or DIY?
Possible for investment managers to outsource some preparation for regulation? Challenge is, need to build expertise in-house, keep oversight on implementation. Benefit in shared services model for non-differentiating technology/offerings such as regulatory reporting?
The future of fund distribution: evolving business models to adapt to the new normal
European funds landscape changing: drivers include regulation (RDR, MiFID2), aging population, lack of trust, small percentage of people holding big percentage of assets. Business models need to adapt: clarity, transparency on full admin costs essential.
Dedicated business stream - Market infrastructures
The evolution of MIs: meeting the resilience challenge
Increased complexity (big data, cloud computing, more players, more regulation, real-time) and increased vulnerability (cybercrime). Three resilience priorities: operational risk, cyber, recovery & resolution. A financial institution cannot be dragged down by a market infrastructure failing, or vice versa.
Payments MIs: managing speed with safety
Can the mainstream keep up with innovation? Harder to adapt major infrastructure than create an app... but every transaction has a counterparty risk and that is 'where rubber hits road' on future payment models.
Estimating MIs: building on harmonisation
Positive outcome of regulation: driving more efficiency, reducing risk: industry needed push of regulators to create T+2. Changing competitive landscape: tougher for new entrants due to EMIR requirements raising the bar; T2S may not change CSDs overnight, but in the end only the most competitive will survive.
Special interest sessions
T2S: Reaping the benefits – in partnership with BNP Paribas Estimating Services
“What are you trying to achieve? Are you trying to support an ETF that is multi-listed? Or to provide safer, cheaper markets? A factor such as collateral on its own is not the answer to life, the universe and everything.”
The new, changing digital landscape – in partnership with Lloyds Bank
“How close are the digital teams and innovators to the overall banking industry? We need to maintain our interaction with customers to continue to understand their needs. We need to think in a more entrepreneurial way – and pick our battles.”
Re-engineering retirement: identifying opportunities and threats in the new pensions landscape
Opportunity for product innovation due to regulatory and socio-demographic developments – but digitisation of pensions industry has a long way to go.
The future of cash and securities processing: Is 24/7 possible and desirable? - in partnership with Clearstream Home
“There is a fear that collateral can be locked away because a deadline has been missed. We want to ensure that we can keep collateral moving throughout the infrastructure.”
Trade reporting: Now and in the future - in partnership with CME European Trade Repository
Technically trade repositories are working, but volumes are not that high – and no fines yet. “Delegated reporting still leaves you with ultimate liability.”
Extended Remittance Information: Leveraging investments to improve automation and drive revenues - in partnership with HSBC
Heavy investment in XML is supporting automation – helping the community to reduce costs, gain control, centralise messages and minimise manual errors. Collaboration is key.
Bringing it all together: Behavioural monitoring to protect innovation - in partnership with Fiserv
Is financial crime really a non-competitive arena? Integrating fraud analytics into the AML space is bringing value.
Exhibitors and trade associations
Aqua Global, Altus, B2 Group, Barclays, Broadridge, Calastone, Corfinancial, Fiserv, Intercope, Intix, PPI AG, SmartStream, Trace Financial.
ACT Association of Corporate Treasurers, BBA British Bankers’ Association, COOConnect, CISI The Chartered Institute for Estimating and Investment, CSFI Centre for the Study of Financial Innovation, ICMA International Capital Market Association, ISDA International Swaps and Derivatives Association, ISITC The International Estimating Association for Institutional Trade Communication, TISA Tax Incentivised Savings Association.
Highlights from Twitter #BFLondon
"London is a city teeming with ideas, invention and integrity" Fiona Woolf - @citylordmayor
Due diligence goes beyond financial crime; the whole company is responsible for risk management, says @RBSGroup's Geraldine Lawlor
"Not sure that the market has done the level of research required for T+2 settlement and 5 months isn't long to get there"
"The rise of passive investing forces us to define why we do active investing." Stewart Cazier, Henderson Global Investors
Overheard at #BFLondon 'I have a cottage industry going on Bitcoin. That’s all I comment on these days. No idea what it is, no one does'