EVOLUTION OF FINANCE
>> with operational cost reduction leading to increased use of technology to reduce costs, and growing public distrust of formal financial institutions allowing new entrants to emerge. The first block of the blockchain – a
decentralised database comprising a network of nodes that validate and copy information – was mined on 3 January 2009. Since then, much has been written about its potential uses in the sector, including expediting payments and improved transparency and security, with some hailing it as a “financial revolution” that liberates investors from a reliance on governments, banks, exchanges, and clearing houses (see
cisi.org/cryptocraze). Looking ahead, Lisa Blenkinsop
predicts that “quantum computing will become increasingly mainstream amid concerns that cybercriminals are looking to use the technology to implement attacks before financial institutions have the chance to respond”.
Financial planning and paraplanning Having worked in financial services for more than three decades, David Jones, head of UK and Ireland adviser group and vice president at Dimensional Fund Advisors, has witnessed first-hand the evolution of financial planning. “Until the mid-1990s, personal finance product manufacture and distribution were dominated by large, traditional insurance companies,” says David. “Salespeople and
CISI OPERATIONS FORUM Chaired by: Frank Reardon, Chartered FCSI, head of investment administration at JM Finn & Co
Over the past 15 years, operations has become increasingly integrated with compliance and risk, while automation of processes has removed some of the human interaction and extended the role of operations into areas such as change
management, says Frank.
Two key future skills Frank highlights are adaptability and cybersecurity. Adaptability is “particularly valuable when staff are being cross-trained in other areas”, says Frank.
The fact that the forum membership is currently split between returning to physical events and participating online underlines the importance of information security going forward as employers manage staff who want to work from home in the long term.
“Client-facing staff must create a secure space, which they may need to share with partners, to ensure confidentiality is maintained.”
Frank adds: “The ability to work with AI (another priority future skill) is essential as we use a machine learning tool for regulatory training.”
Frank says there is work to be done to improve the perception of operations as a career, noting that many people still join operations departments as a stepping stone into the front office as investment managers or traders.
“There is a lot of interest in how the UK regulatory environment will evolve post-Brexit,” he adds.
“There will also be an increased focus on employee wellbeing and diversity.”
CISI RISK FORUM Chaired by: Nick Garnish, Chartered MCSI, head of treasury, Europe, Asia, and Australia, at the Canadian Imperial Bank of Commerce
Risk Forum events cover “a broad range of risks including regulatory, liquidity, credit, market, model/estimation, operational, governance (conduct and culture), legal and compliance, strategic and business, systemic, geopolitical, reputational, cyber, and climate
risk”, says Nick. The forum also contributes and consults on risk-related articles for The Review.
Nick observes that risk measurement has become increasingly sophisticated and professional over the past 30 years, with more clearly defined accountability.
“When we compare the risk of running a traditional bank with managing a fintech, the key is to understand
how each risk topic is properly applied and how it varies according to different business models where it can be negligible or material,” he says.
According to Nick, two key future skills that have the greatest relevance to risk management are teamwork and relationship management. “Adaptability is also key in a changing environment – good risk professionals should always be looking for new and emerging risks.”
Looking ahead, Nick expects regulators to continue to seek to measure risks to financial firms and ensure they maintain robust capital and liquidity positions to withstand various stressed environments.
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THE REVIEW SEPTEMBER 2022
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