Tackling Regulation and Compliance Issues in the Financial Services Sector – There is Help at Hand

  • Said Tabet, Lead, Governance Risk and Compliance Strategy at EMC

  • 15.01.2016 01:15 pm
  • regulations , Compliance

2016 is set to be another milestone year in financial services (FS). With new challengers in the sector disrupting traditional players with innovative solutions, and global regulatory changes being introduced, financial services organisations face a number of challenges to ensure access to data and reports remain compliant. However, whilst some of these challenges seem vast and tricky to manage, the launch of specific institutions to help support FS organisations will hopefully ease the learning process.

While the Markets in Financial Instruments Directive (MiFID) framework will come into force in July this year, the ongoing impact of Basel III, the EU Banking structural reforms and the Bank of England’s focus on stress tests to assess the funds being held by UK banks and ensure that they will not need to be bailed out again continue to pile pressure on financial institutions. Add to that theDodd–Frank Wall Street Reform and Consumer Protection Act (DFA) in the US and the European Markets and Infrastructure Regulation (EMIR), which both aim to increase transparency and reduce risk, and it makes for a complicated picture for all involved.It could be likened to trying to skateboard whilst trying to juggle… with flaming batons!

What is crucial is that all institutions ensure that they have the tools in place to analyse their business, the data they hold and the ability to report to the various institutions calling on them to deliver evidence that they are meeting new industry standards. While the context within the industry is that of greater pressure to conform to industry regulations, the market context is one in which consumers are demanding new services and more innovative delivery of these services, creating a further technological challenge. This challenge is made more difficult as businesses increasingly have to deal with increasing amounts of data from varying sources, in various forms and with varying degrees of complexity, whilst regulators are pushing for more granular data. This context is creating a complicated picture for any business looking to get ahead, while keeping in line.

Organisations are working to deliver on both fronts. However, the difficulty for many is in actually understanding whether they are compliant with the multitude of regulations coming into play in a relatively short space of time. Many of these businesses depend on highly complex, monolithic systems to handle data. This makes them difficult to manage effectively and slow to respond to new developments in technology.

The good news is that there are organisations being set up to support financial services firms as they make this transition and pool resources to help to tackle what is set to be an industry-wide challenge. EMC recently announced the launch of the Boole Business Labs from the University College Cork (UCC) as Europe’s first industry-led research centre, with a specific focus on regulated industries, including financial services. This institution has been launched with support from the Irish Government, international businesses, technology vendors and regulators. Crucially, this type of centre can help to ensure that, when rolling out new technologies and IT infrastructure in a bid to drive innovation, financial services organisations remain compliant and have visibility of any gaps, along with support in tackling any problem areas. Covering areas including cybersecurity, risk analysis and business system integrity, these institutions could hold a central role moving forward as financial services firms work to ensure that they don’t miss a beat and suffer potentially significant compliance fines.

In today’s digital world, keeping pace with technological advancements and compliance standards poses serious challenges for highly regulated industries such as financial services and insurance. Financial services institutions must make a concerted effort to understand how their business is responding to regulation and recognise any gaps quickly.

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