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a restricted banking licence and are aiming to launch early next year (Monzo and Starling) or are already trading with a view to launching additional products and services throughout 2017 (Tandem and Atom). Competition amongst them is likely to heat up next year as they continue to develop their offerings in an attempt to stand out and convince consumers to switch from
their existing provider.” Rishi Khosla, Co-founder and CEO, OakNorth Bank
“The way banking services are currently provided is tied to the specific conditions – first and foremost commercial and increasingly regulatory and technological – that prevailed when each service surfaced to serve a need. From there now-familiar departments, pricing structures and services line were set up to deliver the service designed to fulfil the need. With time, services evolved, needs evolved and secondary purposes were found for the original services that were often much more profitable than the original intent. By osmosis, default and creative exploration, the financial services came to be what we know today.
What we are now starkly faced with is a continuation of the evolution where although the functions of banking are still needed it is has become increasingly apparent that the way they are carried out is not. 2016 has been a stark year for that: for not only have customers increasingly questioned the cost of banking services across the money lifecycle but now the regulator has joined the chorus clamouring for profound, systemic change. Be it MiFiD II, CASS or PSD2 the implications of regulatory reform are clear and far-reaching.
That is a hard question for banks to tackle: how to remain relevant in a world that renders the way they do things – but not the things themselves – irrelevant? If you sit in a part of a bank that provides agency services (no longer needed in a world that allows for trust-less transactions on the blockchain) or reporting services (rapidly replaced by API connectivity) that’s grim news but if you are a customer, retail or institutional, the news is great. If you are the banking executive you have time for neither because you have a responsibility to your customer, employees and shareholders to focus on the big question: in a world that may no longer need every aspect of my activity but still needs my services, how can
I use the amazing wealth of new technical capabilities to reassert my value proposition, serve my customers’ needs and equip my people to deliver?
2017 will be a year where more banks will have to grapple with these fundamental questions and define how they will answer them encompassing the overlapping cultural, organisational (both structure and products being offered) and technological aspects. They will need to close the talent gap around technical and organisational skills that can take their organisation not into the new quarter as much as into a new economic paradigm.” Leda Glyptis, Director, Sapient Global Markets
“RegTech has become something of an industry buzzword over the past year. With an increasingly complex regulatory landscape and MiFID II deadlines approaching, I believe that 2017 will see this sector move beyond the buzz. Whilst a relatively new initiative, the many challenges being presented by new regulations means that we are seeing enough proponents to push this movement forwards. There are a broad range of problems being solved, but there are a few areas worth highlighting when looking ahead to 2017.
Firstly, we will see continued innovation in tools designed to monitor and manage regulatory text for market participants. For regulation to be applied consistently and effectively, financial firms and regulators need to be able to understand the complex intentions of a text that has likely been a compromise between a variety of member states and translated into multiple languages. To overcome misinterpretation and highlight areas of inconsistency, we are seeing innovation in areas such as regulatory knowledge management, semantic modelling and domain specific languages.
We are now seeing a greater shift towards cloud technology, despite initial concerns relating to security. The ability to deliver elastically scalable services is particularly relevant for regulatory services where the demand may be highly variable based on market volatility. This is not only relevant for major players but also allows best-of-breed solutions to be cost-effectively delivered to smaller firms impacted by growing regulatory demands.
www.ibsintelligence.com © IBS Intelligence 2016
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