Doug Morgan, Group Chief Executive, Cordium
The past few years have been challenging times for the compliance teams of financial firms and 2018 will be no different – if anything, the pace of evolution is set to accelerate on a number of fronts.
From input gathered from clients and other industry contacts, Cordium has pulled together a list of the ten trends that investment firms should be most focused on in 2018 and beyond. In no particular order, these are:
- Don’t assume MiFID II is done and dusted: The deadline for MiFIDII compliance may have passed, but this package of EU regulation will continue to have a significant impact during 2018. While it appears many firms missed the initial deadline and extensions have been granted in some markets, we expect firms will need to continue to fix and update the programs they’ve implemented. There is also a high likelihood of a sequel to MiFID II, focused on addressing elements found to be problematic during implementation.
- Prepare yourself for increased risk and capital rules: EU and HongKong-based investment firms will need to start implementing new frameworks designed to improve the way they manage risk. In particular, firms regulated by the Hong Kong Securities & Futures Commission now have to implement a new Fund Manager Code of Conduct, which will come into force in November 2018. EU firms are facing an even more significant set of changes with the implementation of a new prudential capital framework for investment managers. New rules could be in effect from as early as 2019.
- Check your conduct: Regulators will increase their focus on monitoring the behaviour of individuals within financial firms through structured frameworks that hold individuals more accountable for their decisions and actions. For example, UK investment firms will need to prepare for a new senior managers and certification regime, expected to come into force in mid-to-late 2019. In Hong Kong, a similar regime was published in December 2016 requiring firms to submit their management structure and comply by April 16, 2018.
- Be prepared for increased vigilance around market abuse: Regulators will continue to put real priority on stamping out market abuse and insider trading. For example, it’s likely the SEC in the US will issue some form of guidance around material non-public information (MNPI) during 2018, which will require firms to implement more specific policies and procedures. In Europe, there will be an increased focus placed on using the data generated by MiFID II’s transaction reporting – estimated at more than one trillion data points each year – to tackle market abuse.
- Brace yourself for Brexit: Firms should be planning now for the UK’s EU withdrawal in March 2019, creating operational strategies which can be implemented depending on the specific outcome of the negotiations. They need to closely examine a range of factors, including where current and future revenue streams will come from and how their supply chain might be impacted by any potential deal. It’s important to allocate senior management and board time to these issues and for the firm to engage with key external stakeholders. Firms need to plan during 2018 to ensure they are not only positioned to continue business as usual but also to prosper despite what Brexit brings.
- Prepare for increased regulatory scrutiny: The sheer volume of rulemaking in the wake of the financial crisis – which occurred a decade ago – has been tremendous. With these rules mostly now in place, regulators will focus on ensuring they are being properly adhered to. For example, the SEC has invested heavily in analytics and requested additional data from firms through regulatory filings, such as the recently amended Form ADV. Regulators are actively using this information to better understand the overall industry environment and to target firms with issues more selectively.
- Create comprehensive cybersecurity processes: Cybersecurity will remain one of the most aggressive areas of regulatory evolution in 2018. Across the globe, governments and regulators are scrambling to implement new rules and improve existing frameworks for the management of the cybersecurity risk of financial firms. All firms will need to be able to evidence the specifics of their cybersecurity programs to regulators.
- Prepare for a clampdown on cryptocurrencies: Regulators have begun to state clearly how they will regulate the financial products and markets associated with cryptocurrencies. Their focus on this sector will continue to increase as firms look for safe ways to incorporate cryptocurrencies into their investment strategies. While monitoring the rapidly evolving regulatory activity in this space, all firms investing in cryptocurrencies need to be prepared to answer questions about risks, such as secure custody, and how they’re addressing existing compliance requirements.
- Embrace FinTech and RegTech: Firms need to keep up on developments in this space to better understand how technology can help them comply with regulations in more cost-effective ways. Many firms are already considering document-tracking solutions to ensure the firms’ compliance practices match their stated policies and to evidence these processes to regulators.
- Reduce your reputational risk: Increased regulation creates the potential for greater reputational damage, so compliance teams need to think more strategically about how to mitigate this risk. This could involve regular reviews by a Chief Information Security Officer (CISO) to ensure data is adequately controlled and protected, providing a document solution to track compliance policy adherence and process completion, or installing a solution that captures MNPI from employees more effectively.
Reflecting a new normal, 2018 will bring new challenges for compliance and technology teams at investment firms. By taking fresh approaches to the methods used to achieve compliance and aligning programs with their firms’ growth strategies, compliance teams can be more confident in confronting the changes which the new year brings.
U.S. inauguration turns poet Amanda Gorman into best seller
WASHINGTON (Thomson Reuters Foundation) – The president’s poet woke up a superstar on Thursday, after a powerful reading at the U.S. inauguration catapulted 22-year-old Amanda Gorman to the top of Amazon’s best-seller list.
Hours after Gorman’s electric performance at the swearing-in of President Joe Biden and Vice President Kamala Harris, her two books – neither out yet – topped Amazon.com’s sales list.
“I AM ON THE FLOOR MY BOOKS ARE #1 & #2 ON AMAZON AFTER 1 DAY!” Gorman, a Los Angeles resident, wrote on Twitter.
Gorman’s debut poetry collection ‘The Hill We Climb’ won top spot in the online retail giant’s sale charts, closely followed by her upcoming ‘Change Sings: A Children’s Anthem’.
While poetry’s popularity is on the up, it remains a niche market and the overnight adulation clearly caught Gorman short.
“Thank you so much to everyone for supporting me and my words. As Yeats put it: ‘For words alone are certain good: Sing, then’.”
Gorman, the youngest poet in U.S. history to mark the transition of presidential power, offered a hopeful vision for a deeply divided country in Wednesday’s rendition.
“Being American is more than a pride we inherit. It’s the past we step into and how we repair it,” Gorman said on the steps of the U.S. Capitol two weeks after a mob laid siege and following a year of global protests for racial justice.
“We will not march back to what was. We move to what shall be, a country that is bruised, but whole. Benevolent, but bold. Fierce and free.”
The performance stirred instant acclaim, with praise from across the country and political spectrum, from the Republican-backing Lincoln Project to former President Barack Obama.
“Wasn’t @TheAmandaGorman’s poem just stunning? She’s promised to run for president in 2036 and I for one can’t wait,” tweeted former presidential candidate Hillary Clinton.
A graduate of Harvard University, Gorman says she overcame a speech impediment in her youth and became the first U.S. National Youth Poet Laureate in 2017.
She has now joined the ranks of august inaugural poets such as Robert Frost and Maya Angelou.
Her social media reach boomed, with her tens of thousands of followers ballooning into a Twitter fan base of a million-plus.
“I have never been prouder to see another young woman rise! Brava Brava, @TheAmandaGorman! Maya Angelou is cheering—and so am I,” tweeted TV host Oprah Winfrey.
Gorman’s books are both due out in September.
Third on Amazon’s best selling list was another picture book linked to politics and projecting hope: ‘Ambitious Girl’ by Vice-President Kamala Harris’ niece, Meena Harris.
(Reporting by Umberto Bacchi @UmbertoBacchi, Editing by Lyndsay Griffiths. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
Why brands harnessing the power of digital are winning in this evolving business landscape
By Justin Pike, Founder and Chairman, MYPINPAD
Delivery of intuitive, secure, personalised, and frictionless user experiences has long been table stakes in digital commerce, well before the era of COVID-19. As businesses harness the revolutionary power of digital technologies, they have pursued large-scale change to adapt to evolving consumer preferences (some more successfully than others, but that’s a blog for another day). Digital transformation is a term we hear repeatedly, and it looks different for each organisation, but essentially, it’s about utilising technology and data to digitise, automate, innovate and improve processes and the customer experience across the entire business.
As I said, this was already well underway but then came 2020 and no industry escaped the disruption of the coronavirus outbreak, which has had an indelible impact on businesses performance, operations, and revenue. Regardless of whether the impact of COVID has been very positive or very challenging, it has forced organisations globally to re-evaluate and re-orient strategies to adapt.
As lockdowns and pandemic-related restrictions continue to change daily life, this raises the question of how we can balance a dramatic shift to digital and the benefits it brings, while ensuring business continuity and innovation both during and post-COVID, and protecting everyone against fraud?
Digital is an essential survival tool, and even more so in a COVID world
No one could have predicted the dramatic digital pivot that has taken place over this year. Indeed, within weeks of the COVID outbreak cash usage in the UK dropped by around 50%. Digital solutions including delivery applications, contactless payments, mobile commerce, online and mobile banking have become essential components of a touchless customer experience in the era of social distancing. It’s no longer just about an enhanced and superior customer experience, it’s also about health, safety and survival.
In store, businesses have benefited from contactless payments enabling faster throughput and reduced need for consumers to touch payment terminals (therefore requiring greater cleaning, which degrades the hardware much faster). Mastercard reported a 40% increase in contactless payments – including tap-to-pay and mobile pay – during the first quarter of the year as the global pandemic worsened. Digital has also become an essential sales channel for many B2C brands. Where brick and mortar stores have been required to close, digital commerce enables continuity of customer relationships and revenue. This channel also provides brands with rich customer data, which can be used to enhance and personalise the customer experience and typically results in greater levels of engagement and uplifts in revenue.
Industry forecasts estimate that worldwide spending on the technologies and services enabling digital transformation will reach GBP 1.8 trillion in 2023 – a clear indication that the process represents a long-term investment and a global commitment to digital-first strategy. The key point here is that digital brings significant benefits, and regardless of COVID, is here to stay.
The challenges that rapid digital transformation brings to businesses
Regardless of whether businesses are operating in developed or less-developed economies, these times of crisis have levelled the playing field in the sense that all businesses are facing similar issues. Access to products and supplies, maintaining customer relationships, accelerating sales for some and declining sales for others, health and hygiene are just a few of the unique challenges brought about by COVID.
Many businesses in physical environments have had to swiftly implement changes to significantly reduce safety risks for staff and customers, such as contactless payments, mobile ordering and delivery options. But with these changes come a host of other benefits of digitisation, such as faster transactions, and reduced human error at the point-of-sale.
The reliance on technology, however, can also expose organisations and consumers to certain vulnerabilities. In particular, the risks of fraud and cybercrime have dramatically increased since the onset of the pandemic as scammers have taken advantage of digital technologies to target both businesses and individuals.
As a McKinsey report illustrates, new levels of sophistication in the activities of fraudsters have placed more pressure on companies that have been previously slow to go digital, bringing “into sharp relief how vulnerable companies really are”, and damaging the financial health of small and large businesses. In fact, the Bottomline 2020 Business Payments Barometer reveals that only one in 10 small businesses across the UK report recovering more than 50% of losses due to fraud.
But take these stats with a grain of salt. While it is important to be aware of the risks and challenges this new business landscape brings, it’s equally as important to have a lens firmly across your own business, industry and audience, and to identify the changes you can make internally to mitigate risk as well as improve your customer experience. Where can you make some quick wins? Do you have the right skillsets internally to achieve what you need to achieve? What technology is out there that will enable your business goals? There are tech companies like MYPINPAD that are making huge strides in software development, which will transform businesses globally.
A digital world post-COVID
Almost a year in, the line between business success and failure remains fragile. However, an ongoing transition towards greater digitisation will be the difference between survival and the alternative.
There is a wide range of initiatives businesses can implement to weather this storm. If we look at the space MYPINPAD operates within, secure digital consumer authentication is crucial to the ongoing success and security of not only financial products but also identification and verification across a range of different industry verticals. Shifting the authentication of consumers securely onto mobile devices enables businesses to completely reshape their customer experiences. By bringing together a more seamless, frictionless customer experience, accessibility, privacy, security and access to consumer data, businesses are able to drive digital transformation across day-to-day activities.
Against this backdrop, software with stronger security standards continue to play an ever more vital role in supporting society, protecting consumers and businesses from the increase in risks that rapid digitisation brings. Already, merchants can deploy PIN on Mobile technology from companies like MYPINPAD, onto their smart devices to speed up the digitisation process many are now tackling.
Essentially, opening up universal payments and authentication methods that feel familiar, for both online and face-to-face transactions, will be key to opening up a world of possibilities when it comes to redefining how businesses engage with consumers.
Brexit responsible for food supply problems in Northern Ireland, Ireland says
LONDON (Reuters) – Food supply problems in Northern Ireland are due to Brexit because there are now a certain amount of checks on goods going between Britain and Northern Ireland, Irish Foreign Minister Simon Coveney said.
British ministers have sought to play down the disruption of Brexit in recent days.
“The supermarket shelves were full before Christmas and there are some issues now in terms of supply chains and so that’s clearly a Brexit issue,” Coveney told ITV.
The Northern Irish protocol means there are “a certain amount of checks on goods coming from GB into Northern Ireland and that involves some disruption,” he said.
(Reporting by Guy Faulconbridge; Editing by Tom Hogue)
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