While banks have deployed compliant MiFID II solutions, there are several cases where the implementations remain reliant on manual processes, in particular where requirements or interpretations changed at a late stage.
In this blog, we take a look at the road ahead and how a future-proof solution can be accomplished as part of the Day 2 activities. Focusing on the strategic optimization of the operating model and considering new technologies such as Process Mining, Robotic Process Automation (RPA), Big Data and Blockchain is crucial to gain efficiency while remaining fully MiFID II compliant.
Only a few years ago, human beings were needed to understand text and recognise images. It is now becoming increasingly possible to automate these functions using cognitive technologies, such as machine learning. In fact, one of the first practical deployments of machine learning, the automated processing of handwritten cheques, began in banking in the early 1990s.
Twenty months after the European Banking Authority (EBA) issued the first draft, on 13 March the regulatory technical standard (RTS) on strong customer authentication (SCA) and Common Secure Communication (CSC) under revised Payment Services Directive (PSD2) was finally published in the Official Journal of the European Union.
The length of the process and the number of iterations required to finalise the standard evidence the complexity of developing rules to establish a level playing field between different market participants, while at the same time ensuring technological neutrality, consumer protection, and enhanced security in payments services.
The finalisation of the RTS is an important milestone which will give firms much more clarity and certainty on how to push forward their PSD2 compliance and strategic programmes. Nevertheless, the final RTS still leaves a number of important questions open, particularly in relation to the development and testing of access interfaces for Third Party Providers (TPPs).
Digital innovation has had a smaller impact on banking than in other industries – at least up to now. Companies in other industries have been much more alert in responding to the innovative disruption from digitisation, if not driving it themselves.
Banks can learn a thing or two from their industry peers. Coming from the financial sector myself, but now as a banking «outsider», I reflect on seven essential questions that are relevant for every banker.
Deloitte’s financial services practice is the largest professional services organization in the world. This offers me the daily opportunity to work with clients and address their heart of business issues. It means that I see global, regional, and national financial services organizations in action. I see how they face the current market and how they plan for the future offered by the disruptions taking place.
We are in the early stages of a technology driven transformation of the financial services industry globally.
Banks and their clients have to comply with new MiFID II/MiFIR rules and obtain unique Legal Entity Identifiers (LEI) since January 2018. Otherwise, banks are no longer allowed to execute trades on behalf of their clients. Deloitte Managed Services demonstrates how managed service providers should adapt and extend their offering in compliance with new regulatory demands on their clients. The new LEI portal helps banks and legal entities to understand the new regulations and to get compliant with the new MiFID II/MiFIR – LEI requirements.
Industry asked for more time to make the FATCA and QI Responsible Officer (RO) certifications and it appears as though the IRS have listened, but at what cost? While some of the major issues have been addressed, it becomes more and more apparent that the FATCA and QI RO certifications will be onerous and will require significant attention from the ROs and their teams.
The most successful banks are able to benefit from outsourcing activities and at the same time manage the associated risks. Not all banks have been successful in managing risks from outsourced activities and in response FINMA, in its revised circular 2018/3, mandates minimum risk management requirements for outsourcing activities by banks, securities dealers and, for the first time, insurance companies domiciled in Switzerland as well as branch offices of foreign insurance companies. The revised FINMA Circular 2018/3 will come into force on 1 April 2018, although there are transitional arrangements for outsourcing arrangements already in place on that date.
This blog sets out the key regulatory requirements in the Circular.
Lugano Banking Day, 20 March 2018: Opportunities for the Swiss and Ticino financial sector in the era of FinTech
We were delighted to take part in the inaugural Lugano Banking Day, which attracted over 700 participants from the Ticino banking sector – the third largest financial centre in Switzerland. In a day full of interesting discussions on trends in the financial technology industry, we were glad to share ideas about the future role of traditional financial services in the era of digital transformation.
Radical technological innovations in the financial services industry are pushing the banking sector to reconsider existing business models and operations. However, over the last ten years, Swiss banks have already demonstrated an impressive capacity to adapt their way of conducting business in order to mitigate the effects of the global financial crisis, and regulatory changes in the area of tax reporting. Accordingly, the speakers at the Lugano Banking Day 2018 expressed confidence and optimism, and the disruptive nature of FinTech was perceived as much more of an opportunity than a threat for the financial sector in Ticino and the rest of Switzerland.
A survey conducted among 15 Deloitte member firms in Europe on the go-live experience shows that most banks are not yet fully compliant with all elements of the MiFID II regulation. They face operational challenges regarding topics such as Best Execution, Transaction Reporting, Market Infrastructure and Client Information duties.
With the focus being on finalizing outstanding implementation tasks, it is also important to look on the road ahead. Day 2 drivers like the strategic optimization of the operating model have to be taken into account and planned for.
A second blog will deep dive into the most challenging MiFID II topics and how new technology should be in focus when planning Day 2 activities.
Capabilities instilled by Artificial intelligence (AI) have the potential to radically change the way banks operate – a fact that increasingly puts AI on the executive agenda. In this blog post, we explore how existing AI applications can impact operating models of retail banks today. While there is already a large number of applications in place, the majority of these only enable innovation around the core thus instilling only limited change to the existing business. We believe, however, that banks should consider looking beyond their core to identify how AI can transform their business models, thereby unleashing additional value.