– Chris Labrey, MD of Econocom UK & Ireland
Even if or when the UK leaves the EU with a Brexit deal, businesses are still likely to feel much uncertainty. For instance, VAT payments on the import and export of goods and services to and from EU countries will change, while patents and IP may need to be re-examined. Beyond Brexit itself, businesses will face many challenges and changes as the UK re-negotiates its trade deals through the transition period.
The UK has already missed two leave deadlines and it’s now nearly three and a half years since the country voted in the referendum — far too long for businesses to adopt a ‘wait and see’ approach. Understandably, there is a hesitance among some organisations to invest heavily in new assets, such as technology. Indeed, the recent CBI PwC Financial Services Survey reports a decline in optimism, and many plans to launch new products and services are on hold. In addition, profitability is at its weakest performance since 2009.
However, investment is crucial to business survival. The same report details that banks are hiring at their fastest rate since 2006 to manage projects, regulations and to prepare for Brexit. Investment management is also seeing strong growth in capital expenditure, including IT, as the key drivers for spend primarily relate to increasing efficiency and speed.
Yet unless budgets are limitless, financial organisations will need to make decisions as to what IT investments have a higher priority over others. But what if there is a way to ensure that all technology requirements can be met, not just some? Subscription models could be the solution.
Embracing subscription and as-a-service models
Subscription and as-a-service models not only ease the burden of an upfront investment, but they also allow financial organisations to implement the latest technology while streamlining payments and minimising the risks of deployment. This strategy has many business advantages, such as:
Access to the latest technology
While large IT investments are carefully planned and budgeted for, sometimes decisions need to be made quickly as the latest technological and software developments are required to remain agile and stay ahead of the competition. With an as-a-service solution, there is no waiting game in terms of budget or capex; the technology can be added to the existing subscription and deployed within the organisation almost instantly.
In today’s working environment users — financial customers and employees — expect to have access to the latest technology. Otherwise, employees feel disempowered, demotivated and unable to do their job, while customers simply vote with their wallet.
The beauty of subscription and as-a-service models is that technology can be deployed and upgraded as it is needed — staff can be productive, and the customer experience isn’t impacted. These models are also versatile enough to include warranty and insurance services meaning that technology can be replaced quickly with minimal user downtime. Lifecycle management solutions can also be included to minimise the total cost of ownership.
New technology is not only a productivity perk, but can also offer more flexibility, providing an added incentive to motivate employees and drive the business forward. This could mean working from home, or the use of shared mobile devices within the office, designed to facilitate collaborative working.
Subscription and as-a-service models allow new devices or platforms to be added on to existing contracts as employee numbers increase.
Planning for the future
With the UK’s future relationship with the EU remaining unclear, businesses are understandably putting off large investments. However, what is evident is that investment in new technologies is key in order for financial services organisations to remain ahead of the curve, agile and relevant in a competitive landscape.
Replacing, upgrading or installing new technology and software assets can be time-consuming, challenging and costly. In lieu of sign off for large standalone investments being available, subscription and as-a-service models are a viable way for financial businesses to spread costs over several years. In this scenario, capital expenditure is protected, whilst business processes and customer service are improved, empowering users and driving success in customer attraction and retention.
Therefore, in these uncertain political times, it is key for future success to find a trusted technology partner, who understands the financial sector and can support with the set up and management of new technologies to maintain growth. When implemented through a subscription model, this can allay concerns around budget and business agility.
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.
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
BATTLEFACE RECEIVES INVESTMENT FROM FINTECH VENTURES FUND
battleface Inc., a rapidly growing tech-enabled insurance startup focused on providing travel insurance products for unconventional travellers worldwide, announced today that it successfully closed its seed financing round with backing from leading strategic and venture capital investors.
Atlanta, Georgia-based Fintech Ventures Fund has invested in the company, joining existing investors Greenlight Re and Tangiers Group. This investment will be used to expand software development, hire sales and business development personnel, and further the company’s global reach.
battleface is led by a team of travel insurance experts. CEO Sasha Gainullin previously developed global operations for AIG Travel Guard and has worked with battleface since its inception. Managing Director Paul Simmonds brings experience as a Lloyd’s of London underwriter with previous leadership roles at Berkley Syndicate, CNA Hardy, Brit, and Goshawk.
“We got our start because many travellers couldn’t find the right insurance products with coverage for their unique travel destinations and real needs,” said Gainullin. “With the latest investment from Fintech Ventures Fund, we’ll continue to expand our B2B partnerships custom-building travel insurance solutions for groups, including business and NGO travellers, associations and membership-based organisations.”
battleface combines innovative technology and underwriting to create, distribute and service specialty travel insurance products for people in both retail and wholesale. Products are supported by a network of 24/7 assistance coordinators, medical providers and on-the-ground field agents who provide emergency claims, medical and travel assistance services on a global basis.
Fintech Ventures Partner Lucas Timberlake said: “A core area of our fund’s investment thesis is that technology can be leveraged to more efficiently provide insurance products to markets that have been underserved by current offerings. We believe that battleface’s seasoned management team will create an industry leader in the travel insurance space. It is for these reasons that we are excited support the company’s future growth.”
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