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CAPITAL MARKETS PARTICIPANTS HAVE HIT A WALL WITH COMPLIANCE, NEW INTERNATIONAL STUDY FINDS

The research suggests that many broker-dealers and other trading entities have come to a fork in the road, where they must choose between continuing to budget and plan for new IT/data projects ad infinitum, or find a more sustainable approach to real-time reporting -which satisfies the needs of multiple regulators. Jordan Ambrose, CEO of Inforalgo, drills down into the deepening challenges as Capital Markets succumb to regulatory overload.

 

More than a decade on from the last major financial markets crash, which triggered the spiralling regulatory scrutiny that has been seen across financial markets in recent years, the majority of Capital Markets participants continue to battle with compliance-related complexity – which has now reached a peak.

The severity of the pain these firms are enduring is highlighted in new research commissioned by Inforalgo. Set out in the report, Meeting the challenges: Compliance and obligations across regulatory regimes, the study finds that the practical issues are universal. (Half of the research respondents were based in Europe, almost a third in North America, eight per cent based in Africa and just over two per cent in Asia.) The findings are timely too: the survey was conducted between September and November 2019, at a time when the Consolidated Audit Trail was looming large for trading entities, adding to what already feels to be an untenable compliance workload. Indeed, many firms are still reeling from the introduction of MiFID II two years ago. Almost 70 percent of those surveyed said this had had the most significant impact on their firm over the last 12 months.

 

CAPITAL MARKETS PARTICIPANTS HAVE HIT A WALL WITH COMPLIANCE, NEW INTERNATIONAL STUDY FINDS

Jordan Ambrose

Enough is enough

Increasing changes and updates to requirements, and varying needs between different markets around the world, is causing particular fatigue and frustration. Adding to existing reporting burdens are the MAS overhaul in Singapore, FINRA’s CAT requirements, and adjustments to EMIR Refit and MiFID II in Europe.

Without exception, all respondents flagged short preparation windows as a major source of anxiety, with eight percent listing this as their greatest compliance-related concern of all. Related to this is the scale of the work to be done. Half of respondents indicated serious concerns around the volume of transactions or transaction sizes to be reported, while all survey participants worried about their ability to interpret the rules correctly.

 

The call for near-live data feeds prompts firms to seek external help

Seeking relief from this relentlessly stressful situation, 45 per cent of market participants said they were looking to outsource their regulatory obligations to one or more external partners, as a more sustainable long-term approach. This is driven not just by soaring regulatory workloads, but also by the growing demand for real-time reporting.

Under Europe’s MiFID II, for instance, trading venues and certain categories of investment firms must publish volume and price within 15 minutes of a completed trade of equity or similar products. In the US, broker-dealers facing CAT are looking for solutions that capture and manage data in real-time, to ensure reports are made according to the rules’ tight timeframes.

Drastically reducing the amount of time a firm has between execution and filing reports, significant pressure has been put on the market in terms of internal resource – as well as finding the right ‘Regtech’ solution to ensure compliance. Asked what the most important real-time regulatory reporting functions market participants look for in a solution, more than 50 per cent of survey respondents cited data insight or analytics, an intuitive front-end user experience for operations and compliance teams, and real-time reconciliation.

Practical worries ranking highly among market participants ranged from the cost of resourcing compliance projects, to rising concerns about punitive fines and reputational damage if firms are caught out – whether by missing deadlines, or submitting inaccurate or incomplete data.

Data complexity and system interconnectivity are increasingly critical concerns too. It is dawning on market participants more than ever how much duplication of effort is involved when data has to be repeatedly input between multiple systems, because these are not connected or compatible to enable reliable data flow and automated data exchange and reporting.

Time to stop reinventing the wheel

The biggest realisation for market participants is that continuing with their existing approach to reporting compliance is unsustainable – practically, financially and resource/time-wise.

To this end, over a third (39 per cent) of respondents acknowledged that any viable future solution must begin with a more holistic and consolidated approach to trade data. Specifically they acknowledged the value of creating a single, reliable ‘golden source’ of data that can feed everything else, with many firms noting a Regtech solution offering to deliver would hold significant appeal.

Ideally firms need to get ahead of evolving regulatory demands, to the point that they are able to deliver accurate, complete and current data to any authority, in any market, anywhere in the world – both now and in the future. If this means leaning on external services, for instance a cloud-based data management platform/managed service, then so much the better. Such an approach would also offer a means of rationalising already unwieldy and costly-to-manage technology estates.

Probably the biggest realisation of all is that all market participants share the same pain, and have reached similar conclusions about the changes they now need to make – so that compliance becomes more manageable and less of a drain on resources going forward.

 

The author is the CEO at Inforalgo, the capital markets data automation specialists. You can download a copy of the full report, Meeting the challenges: Compliance and obligations across regulatory regimes, here

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CUSTOMER CARE TODAY WILL BUILD RESILIENCE FOR FUTURE CRISES

Customer

Cathal McGloin, CEO of ServisBOT writes, “The COVID-19 pandemic has created major spikes in calls to financial sector helplines dealing with customers who are concerned about temporary business closures, or seeking information on mortgage holidays and insurance cover.

 

Easing the pressure

With call volumes surging at many contact centres, moving customers from a voice to a text-based channel and encouraging some of them to self-serve via your website or mobile app helps to reduce pressure on contact centre agents. A call-deflection solution doesn’t have to be complex, costly or time-intensive, but it can be extremely effective in managing additional call volumes more cost-effectively, while still providing your customers the information that they need to allay their concerns.

If customers are able to interact with a chatbot initially and this resolves their immediate queries, this can significantly reduce call volumes and the business can still enable the bot to handover to a customer service agent for customers that require further assistance.

 

Setting up a Chatbot in 48 hours

Whether your interactive voice response (IVR) is based on legacy technology or is a modern cloud-based solution, it’s possible to deflect customers from an inbound voice channel to a messaging channel. We know, because we have done this for a client who considered this impossible with their legacy on-premise IVR system. Spinning up a solution took just 2 days and allowed them to successfully deflect calls, automate the response, and still offer customers a path to live chat.

 

Employing a Chatbot as a Call Deflection Solution

Financial services businesses can launch a very simple bot. The bot can be as simple as just pointing a customer to the COVID-19 FAQ page or it can be an extension of an existing customer service bot that offers multiple capabilities. On day one it may just be used to quickly assess queries and handover to a live agent. However, by gathering the training phrases from customer chats, the bot can be made progressively smarter and add capabilities, so that it can be trained over the course of  a week to start automating your customer service

After a week the bot can start automating to become more self-sufficient and take more of the burden from your customer service agents, allowing them to handle more complex customer issues.

Using a chatbot opens up a whole new path to automation.  Once customers start to engage with your intelligent virtual agent, the bot can handle simple requests, direct them to the relevant information on your website, or help them transact in a self-service manner. All of this can happen without the need for them to engage with an agent unless they specifically request this, or the bot escalates the request to an agent. It can even be integrated with your live chat systems so that the bot works in parallel with live agents when needed.

 

Future proofing

During crisis periods, when interactions with concerned customers need to be handled well, call deflection using a chatbot or virtual agent takes the pressure off contact centre agents. It also introduces an automation path that can help customers around the clock.

Once your chatbot has been trained to respond to common customer queries round the clock and reduce the pressure on your contact centre staff, your employees can focus on providing the best care for your customers who urgently need to speak to them. Introducing virtual assistants sends a clear message to your customers that they are your priority and increases the resilience of your business against future emergencies.

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NEW IVALUA STUDY SHOWS TECHNOLOGY CHALLENGES ARE HINDERING PROCUREMENT TEAMS FROM ACHIEVING BUSINESS OBJECTIVES

BUSINESS

Lack of system integrations and actionable insights are stopping organisations from accurately measuring performance

 

Ivalua, a leading provider of global spend management cloud solutions, has announced the latest findings of a worldwide study of supply chain, procurement and finance business leaders on Effective Procurement Performance Measurement. The study revealed the challenges procurement teams face when it comes to achieving business objectives and the wide and growing gap in performance between advanced and less mature teams.

 

The research, conducted by Forrester Consulting and commissioned by Ivalua, found that procurement teams are increasingly being measured by non-cost KPIs such as revenue opportunities being created, payment performance (e.g. on time payments) and spend visibility. However, a lack of data integration between systems (44%), lack of relevant insights (40%) and insights not being made available at the right point in the process (39%) are preventing organisations from accurately measuring progress against business objectives. This is because organisations continue to face challenges when it comes to harnessing technology in procurement, with existing systems not being fit for purpose (36%), poor data quality reducing trust in information (36%) and staff having inaccurate expectations of what technology can do (34%).

 

The research went on to reveal that more digitally “advanced” procurement departments are far exceeding “beginner” procurement departments that are less digitally mature in the range of KPIs they track, how frequently they measure success and the levels of planned technology investments. Key findings include:

  • 97% of advanced procurement departments say procurement strategy is well aligned with overall business strategy versus only 14% of beginners.
  • 51% of advanced procurement departments measure performance weekly or biweekly, versus only 26% of beginners.
  • Only 16% of beginners proactively monitor suppliers’ contracts for expiration and risk, versus 94% of advanced – this is critical for helping organisations manage today’s global supply chain challenges, such as the Coranavirus outbreak.

 

“In order for procurement teams to achieve their growing list of objectives and become strategic enablers for their organisations it’s clear they need to overcome a number of technology challenges” said David Khuat-Duy, Corporate CEO of Ivalua. “As we can see from more digitally advanced procurement departments, technology adoption has helped them to align with business objectives, actively measure performance and add value in areas such as risk management. Their investments and approach to leveraging technology is building a competitive advantage.”

 

According to the study, the amount organisations are spending on procurement technology has been rising and expected to accelerate. In the past 12 months, 46% of organisations increased spending by 5-10%. In the next 12 months, 39% plan to increase spending by 5-10%, while a further 43% plan to increasing spending by 10% or more. Procurement leaders are also looking to fully digitise procurement processes (40%), becoming the preferred customers of strategic suppliers (40%), implementing new software for sourcing/procurement (38%) and improving reporting and insights (38%) to help achieve objectives.

 

“It’s encouraging to see organisations investing more in technology, which will help procurement become a key strategic enabler that goes beyond cost reduction to build a competitive advantage,” added Khuat-Duy. “Increasing adoption of technology will allow procurement teams to gain complete visibility into all suppliers and spend. This will open up further opportunities for procurement to help identify revenue opportunities, track risk and improve sustainability, helping to contribute towards wider procurement and business objectives.”

 

Download the full study here.

 

*The February 2020 study was conducted by Forrester Consulting on behalf of Ivalua and is based on a survey of 409 finance, procurement and supply chains decision makers throughout North America and Europe, as well as several in depth interviews.

 

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