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THE FUTURE OF REGULATION IS UNFOLDING IN YOUR UNSTRUCTURED DATA

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By Simon Cole, CEO at Automated Intelligence.

 

When you picture the future of finance, what do you see?

The end of bricks and mortar banking?

A cashless society?

Cryptocurrency payments?

How about data-driven regulation?

Technological advancements don’t just impact the finance industry; they have repercussions for regulators too. The future of finance is on its way, and along with it, the future of regulation. While financial services firms have been embracing digital transformation during the pandemic, they’ve accumulated more data than ever. And this means regulators have had to develop their own data driven approach.

So, what does this mean for firms? Regulators will want to see intelligent data management strategies and tools in place to manage the influx of information. Firms now hold an increasing amount of sensitive information, much of it coming under the category of unstructured data. Without proper management, businesses run the risk of leaving their datasets open to corruption and theft.

Simon Cole

The implementation of new IT infrastructure demands systems and protocols for dealing with risks. Regulators will need to see governance and risk management frameworks that minimise risk for customers, stakeholders, and the business’s reputation.

There is some good news, though. Most firms already have all the information they need to deal with the regulatory future and meet evolving standards of compliance. All they need to do is take control of their unstructured data.

 

Understanding the push towards data-driven operations

When fintech first arrived on the scene, the industry was encouraged to behave like the tech giants in Silicon Valley: move fast, and break things. Firms were excited about the potential of this technology, and the market rushed to implement it into their infrastructure.

In 2020, financial firms shifted to cloud native architecture in response to global lockdowns. As customers demanded more digitised services, they produced an increasing amount of data. Combined with the existing backlog of unstructured data many financial services firms are yet to deal with, the need for intelligent data management solutions has never been greater.

The pandemic changed how the financial services industry uses data. And the FCA is beginning to change the way they manage data, too.  We recently held a data and compliance summit, where our FCA panellist, Steve Green, shared how the regulatory body is investing in skills for handling granular data, so that firms no longer need to aggregate.

Many organisations struggle with the justification of data collection, and as Steve highlighted, better defined taxonomy for the data they’re collecting will illuminate some of these processes for financial firms.

It’s also worth mentioning that the FCA is dealing with significantly more firms. The rise of challenger banks and various finance start-ups means there’s an increasing need for regulation. Automation has enabled regulators to divert their existing resources to more organisations with standardised reporting.

Complex systems require updated methodologies of management. It’s no wonder Suptech – supervisory technology regulators can use to monitor market risks – is on the rise, as regulatory bodies shift their operations to reflect data driven economies. While financial firms embrace regulatory tech, regulators employ supervisory tech to ensure they capture every detail.

The problem is, when you move fast and break things, sooner or later someone needs to clean up the mess. In the aftermath of a rapid switch to fully digital operations during the pandemic, we’re likely to see regulatory and security loopholes in systems that haven’t been properly vetted.

While financial firms were focused on getting operations up and running, data management probably took a back seat. As one of our panellists highlighted at our virtual data and compliance summit – there are only two types of business; those who have been breached, and those who don’t know they’ve been breached.

It’s time for financial services firms to get a handle on their data. The majority of which, is now unstructured, and tricky to collate and analyse manually. Firms embraced technology to help them move their operations online in 2020, now it’s time to embrace the technology that can help them take control of their data.

 

A new environment

As we’ve already explored, new tech creates new risks. Many firms are using cloud systems for the first time, and human error is virtually unavoidable in this situation. Businesses are learning as they go along, which is fine until regulatory compliance is overlooked, and security operations are no longer fool proofed.

Firms need to employ data management strategy and systems that keep up with the new pace. It’s not enough to implement new IT infrastructure without addressing regulatory compliance at the same time. Reported cyber-security incidents increased by 50% in the beginning of 2020, as employees spent time getting comfortable with new systems, and hackers took advantage of the unexpected digital transition.

Regulators need to see that firms have systems and protocols in place that mitigate these risks. And with remote working likely to remain popular, and digital services favoured by customers, firms need a comprehensive overview of their entire data estates to protect sensitive information.

Understanding how regulations map together is critical, too. GDPR highlights the right to be forgotten but combine this with the European anti-money laundering directive, and customer transactions must be kept for five years. Which is why firms need to bring their entire unstructured data estate into one single perspective, where they can map and address regulations.

Without an overarching data management platform monitoring regulatory compliance, new IT infrastructure could be doing more harm than good. If firms want to get the most out of their new intelligent systems, they need to understand them inside out. Implementing a smart data management platform will tell them everything they need to know about the impact new IT infrastructure has on their compliance and data protection status.

If firms want to prepare for the future of regulation, they need to start with their unstructured data present.

 

Business

HOW CAN BUSINESSES BREAK INTO MARKETS BEYOND THE EU?

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HOW CAN BUSINESSES BREAK INTO MARKETS BEYOND THE EU?

Atul Bhakta, CEO of One World Express

 

The build-up and aftermath of Brexit impeded the long-term plans of businesses both in the UK, and of EU businesses trading to the UK. The heavily protracted negotiations induced a culture of uncertainty in business, with few able to adequately prepare for all the future trading landscapes left on the table.

Once a deal was struck, with just one week before the Brexit deadline of 31st January 2020, organisations were then left scrambling to improvise new processes to translate their operations to the new systems and avoid spiralling costs, shipping delays, and various other disruptions.

As a result, businesses both here and in the EU saw a substantial trading slowdown in the months following Brexit, with new rules on customs checks, lengthy tailbacks at ports, denser and knottier administrative rules and new limitations on visas for the workforce all contributing to a tense trading relationship.

Indeed, the Office of National Statistics (ONS) figures revealed a precipitous drop in trading immediately after Brexit, with UK exports to the continent plummeting 40.7% year on year to January 2021.

This is a striking decline, given the historically close economic and cultural ties between the UK and EU. Inevitably, this caused a lull in long-term confidence amongst UK businesses. Indeed, a previous study conducted by One World Express in January 2021 found that 25% of UK companies doubted that they would last until the end of the year.

Atul Bhakta

Of course, Brexit is even now not a finalised issue – it will shift and evolve in significance and relevance as time passes and economies reshape; but the loss of confidence for businesses in UK-EU trade has been a tangible impact within the first year.

Accordingly, some organisations have begun exploring the scope for expansion into territories beyond the EU.

 

New opportunities attracting attention

As noted, the UK’s trade with the EU saw a sharp decline immediately following the formalisation of Brexit. While this decline has recovered steadily over the year, there has been an equally impressive parallel forming, as non-EU trade has remained mostly stable throughout.

Of course, UK imports from global markets have always remained at high levels, and when considering business growth and the economy as a whole, outward trade holds a heightened significance. On the export side of matters, ONS figures suggest that UK exports outside of the EU increased by 1.7% year-on-year to January 2021.

While a very modest increase, such figures indicate that international expansion could carry promise for business leaders, and hint at potentially lucrative opportunities within non-EU markets.

As 2021 progressed, it became evident that UK businesses’ appetite to explore opportunities further afield had grown. To take in the views of decision-makers, One World Express commissioned an independent survey of 752 business leaders in the UK, finding that 61% were either already operating abroad in some capacity, or had plans to expand into new territories over the coming year. More than six in ten (62%) reported Brexit as a key motivator in their decision to diversify beyond trading with the EU.

There was also some evidence that these plans were not solely in pursuit of the gains of modest uplifts in trade with non-EU countries. The survey found that more than two thirds (68%) of exporters had observed increased overseas demand for their products in the previous year, while 63% felt that markets outside of the EU were more willing to pay a premium for British-made goods.

The role of ‘Brand UK’ is significant here. For many years, products made in the UK have benefitted from the country’s reputation for high quality production and excellent service, which has driven a consistent rise in demand as emerging markets with high levels of consumer spending, such as India or China. In turn, UK businesses have found it easier than most to gain a foothold in new markets. Indeed, the majority (67%) of exporters reported their British brand had enhanced the reputation and demand for their goods and services when targeting international consumers.

Despite this innate – and highly welcome – competitive advantage, there are a number of factors UK firms must consider before diving in to unfamiliar markets.

 

The importance of planning

Many would be surprised to learn that a large number of businesses look to enter new markets with minimal planning in place. Notably, almost one third (32%) of exporters do not have such a strategy in place, which is likely to hamper the growth of British businesses abroad if left unaddressed. A crucial starting point for any international expansion plan lies in the research and relationship building.

Ascertaining the consumer preferences and audience behaviours in target markets, and forging appropriate connections with distributors, vendors, and ecommerce platforms, will allow firms to access consumers more easily, and in greater numbers, than marketing from scratch in unfamiliar territory. Encouragingly, according to One World Express’ research, 72% of exporters already include this in their plans.

UK organisations must also recognise the value of a robust and flexible logistics strategy. When products are being shipped to the furthest corners of the globe, there is a degree of risk if the finer details are not handled correctly. Delayed, missing, or damaged deliveries will erode consumer trust, and diminish the prospects of companies before they get off the ground. Accordingly, companies should ensure they have a transparent tracking system and efficient and user-friendly returns process. Investment in adopting the right software solutions to manage the shipping will create a streamlined and cost-effective process, affording firms the best chance at success.

Naturally, the EU will always be one of the UK’s most critical trading partners. However, as the dust settles on Brexit and the pandemic recedes into memory, the next few years present an interesting crossroads for the international prospects of UK businesses. With a tranche of new free trade agreements arriving in the near future, and international demand for Brand UK going from strength to strength, the scope for expansion into unfamiliar markets is growing apace. Provided business leaders get the finer details right, the rewards for bold investment in expansion could help charge a boom in the UK exports sector.

 

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WHAT FIREFIGHTERS CAN TEACH FINANCIAL INSTITUTIONS ABOUT DATA COLLABORATION

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Gabriele Albarosa, CEO, LiveDataset

 

Digital transformation can be difficult for any business, but in the financial services industry it can prove especially tricky. Replacing manual data processes is a big step, but in an industry so heavily regulated and audited, cohesive and comprehensive transformation is crucial.

Today, the challenge is no longer in convincing financial services organisations that they need to transform their processes and tasks; the vast majority understand the benefits of automating and streamlining their financial processes.

Instead, it’s about instilling the message that there is more to transformation than ripping out and replacing outdated technologies. A good financial transformation strategy must also take into account how these technologies are implemented, ensuring they integrate into an organisation’s culture, connect data and guarantee compliance, without completely demolishing the custom processes that employees want to use.

 

Little Fires Everywhere

While business transformation offers long-term benefits throughout an organisation, individual departments are often loathe to abandon the bespoke processes that facilitate day-to-day operations. Many organisations feel under pressure to transform quickly, and subsequently focus on how to get their employees onboard with a new solution rather than integrating every minute component of the old.

As a result, digital transformation efforts tend to bypass these disparate components, leaving small, potentially non-compliant hazards smouldering like little fires across an organisation.

These “little fires” don’t immediately represent a threat to business operations, but the lack of quality control, integration, and visibility of these manual workflows, means they’re inherently high-risk.

When a pressure situation hits the organisation, like a surprise audit, legal proceedings or new reporting demands, these processes become a highly combustible cocktail for non-compliance, lost data and human error.

 

Tackling the flames

Organisations need to tackle these little fires early on, rather than sitting back and hoping they will burn themselves out. But how can they be dealt with?

If you think of these small, unregistered processes as little fires, then your team needs to think like a firefighter — being fast, agile, flexible, and well-prepared for potential risks.

So how can CFOs, CXOs and Chief Transformation Officers bring this strategy to life?

 

  1. Be fast — don’t wait around for largescale digital transformation

There’s a common misconception amongst financial service organisations that before facing the issue, you need to wait until an overhaul of department processes or an in-depth audit. This could leave you waiting years for a solution that needs to be implemented in weeks, putting your department at risk.

Organisations must act with speed and address the issue head-on as soon as it has been spotted. Businesses don’t need to wait for largescale transformation; temporary or even permanent solutions do exist and can be tailored and installed immediately — targeting the issue before it becomes a bigger problem.

In my own business, we recommend a three 3-step approach to tackle these issue quickly: First, listening to an organisation’s business challenges to locate the most pressing fire. Second, build a working example for business leaders and decision-makers to evaluate. Finally, follow up with real-time collaboration to ensure that wider company processes don’t cause similar problems in future.

 

  1. Be agile and flexible — look for customisable solution that evolve over time

Organisations are ever-evolving, and so are the problems they face. However, some financial services organisations see the answer to these problems as a one-time, short-term fix. Working to put out these fires at speed shouldn’t stop organisations from considering how to prevent and deal with future ones. That’s why businesses run fire drills!

Financial organisations need forward-thinking systems that will work now and in the future, whenever they face their next data collaboration crisis. The ability to act in an agile way is fundamental to this sort of futureproofing.

Agile, flexible solutions will enable organisations to fight multiple fires, with the same systems, as time goes on. A one-size-fits-all approach won’t work here. Putting one fire to rest won’t prevent more from happening, and not all fires are the same (just try throwing water on a chip pan fire!) Every organisation has distinct needs and that means customised solutions.

 

  1. Be prepared — implement solutions before disruption occurs

To understand their weakness and subsequently prevent fires, financial service organisations must encourage employees across departments to hold an ethos of self-improvement. Preparation is key to success.

That means establishing a comprehensive understanding of the day-to-day routines of employees at all levels. It’s in habit and routine (one-off processes, keeping data on email, spreadsheets as systems, etc) where financial fire hazards thrive.

If new, more compliant technologies are to be installed, they cannot dismantle these existing routines. Flexible data collaboration solutions are needed that perfectly match the existing way of working. Achieving the goals of transformation without any of the disruption.

 

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