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SIX IN 10 UK FINANCIAL SERVICES WORKERS FEAR THE AFTERMATH OF BREXIT IS THE SECTOR’S BIGGEST CHALLENGE FOR 2020

Nuxeo Research Highlights the industry’s most pressing challenges, which many say leave their organisation vulnerable to losing customers

 

Six in 10 UK Financial Services (FS) workers fear the aftermath of Brexit will be the single biggest challenge the sector has to face over the next 12 months, according to new research from Content Services firm Nuxeo published today.

Other top 2020 FS industry challenges that emerged from the study included: cybersecurity threats and information or data breaches (36%); physical branches closing down (26%); the burden of increasing regulation (24%); competition from Big Tech firms potentially moving into FS (21%), and competition from new challenger banks (20%).

59% of FS workers in the study felt that these challenges left their organisation vulnerable to losing customers over the next 12 months.

“In 2020, UK financial services firms will not only have to deal with competitive and operational pressures, but they expect that the regulatory and political landscape will impact them as well,” said Chris McLaughlin, chief product and marketing officer, Nuxeo. “The firms that will succeed in this challenging environment will be those who focus on improving the customer experience, delivering innovative, new products and services, and embracing technologies that will modernize their operations in order to make all of this possible.”

 

The key challenges for 2020 identified by UK FS workers are already having an impact on their day-to-day activities as 2019 draws to a close. Brexit is the most impactful, with 69%, closely followed by the cyber security threat (67%) and increased regulation (67%).

 

With so many challenges causing such an impact on FS and the people that work in the sector, it would suggest that banks and other FS firms need to address this with their staff. Yet the research findings show there have been differing levels of communication, depending on the specific challenge.

 

The challenge of increased regulation has been communicated successfully to 72% of respondents, while 69% say the same about the cybersecurity threat. Yet 41% say their organisation has not communicated well about its Brexit plans, 37% about the threat from Big Tech Firms and 36% about the threat from challenger brands.

 

The findings come from a recent Nuxeo research paper – Information, Intelligence & Innovation: How UK Financial Services is shaping up for 2020.

 

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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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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.

 

Sasha Gainullin

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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