The Many Advantages of Mobile Banking

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Technology and banking are now inextricably linked. Over the last decade, the two have combined to form a new and ever evolving way of doing business in the finance industry, whether personal, business, investing or any kind of fund management.

The term FinTech (financial technology) has emerged as an umbrella word for all sorts of technological advances in banking. It can refer to smartphone Apps that give instant access to bank accounts to websites offering financial advice without high costs or long waits.

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Myanmar’s Foreign Trade Rises in Latest Fiscal Year

Image of stocks online. Htet Tayza discusses Fintech in Asia.

Myanmar’s government is currently focusing on facilitating greater foreign involvement with the nation’s economy, to supply small businesses with the funds required to foster growth. Figures show that these efforts are paying dividends, as Myanmar’s foreign trade rose during the latest fiscal year.

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Singapore Launches Drive Towards Cashless Society

Htet Tayza discusses economics in Singapore. Image by Nicolas Lennuzel

Htet Tayza comments on a recent announcement made by Ravi Menon, the Managing Director of the Monetary Authority of Singapore (MAS) the city state’s central bank. Menon revealed that Singapore is planning to create a cashless economy, by incentivising banks to take digital payments.

Regional fintech hub 

Singapore is becoming an increasingly prominent regional financial hub. The city state was named the largest financial centre in Asia in think tank Z/Yen Group’s most recent Global Financial Centres Index. Singapore is a triple A-rated economy, provides investors to Asia’s four-billion strong population and is home to over 200 banks, a rising number of which are basing their regional headquarters there.

Furthermore, Singapore is currently developing a thriving fintech scene. Its recently announced fintech policy creates an environment where innovative start-ups can thrive. Singapore’s central bank has said that it will invest US$167 million in fintech projects over the next five years. Also, IBM is planning to create its first fintech research and development centre in Singapore, creating a range of technology pilots which could enhance the city-state’s trade and finance industries going forward.

Going cashless 

Basically, Singapore holds the financial and technological infrastructure to go cashless. Expanding on this point at a recently-held fintech conference, Menon noted that “for consumers, the use of cash for daily payments is high,” while “for businesses, the use of cheques is relatively high too.”

Menon supplemented his case by comparing Singapore to Sweden, which is currently leading the race to become Europe’s first cashless society. Cash circulation rates in Singapore, currently equal 8.8% of gross domestic product (GDP), in contrast with just over 2% for Sweden. In 2014, there were practically no cheques written in Sweden, but there was average of 12.7 cheques written per person in Singapore, so the city-state has some way to go before becoming cashless.

Finding solutions 

Menon noted that its costs Singapore around US$1.5bn per year to store and process cash and cheques, an amount he labelled “non-trivial.” He suggested that Singapore’s bank pass on the expenses involved in providing paper-intensive services to consumers completely going forward, to incentivise them to switch to digital payments. Over the next year, Menon added, the MAS wishes to see the number of digital transactions executed via phone, national ID and other secure numbers rise.

News site Bloomberg notes that Citigroup Inc. published a report in June 2016 which sheds more light on this matter. It noted that based on high bank and mobile phone usage, Singapore, the UK, Sweden, the US and Finland are the countries which are most prepared for digital payments. Furthermore, Singapore is already starting to develop its cashless infrastructure. Companies such as Apple and Samsung have now made mobile payment services such as Apple Pay available in the city-state.

Driving society forwards 

An editorial on Finextra argues that “a mobile cashless society will be revolutionary, safer than cash, convenient, quicker to operate and unstoppable.” It will eliminate paper money-related costs for banks and businesses and end cash-related crime, although it could make financial cybercrime a bigger issue. Furthermore, cashless is more convenient for consumers and could even help tackle global warming, as paper money production is a major contributor to greenhouse gas emission.

Within this context, it is easy to see why Singapore’s central bank wishes to create a cashless society. The city-state is already making some progress, but it has a long way to go. As financial authorities in nearby-Myanmar are currently seeing, it can be hard to persuade consumers to change their habits and switch to digital payments. However if Singapore’s banks follow the MAS’ advice, consumers may switch to digital payments to save money, powering the creation of a cashless Singapore.

Htet Tayza.

ASEAN Reaches Out to Taiwanese Investors

Htet Tayza

Htet Tayza comments on reports which indicate that representatives of the Association of South-East Asian Nations (ASEAN), recently reached out to offer new opportunities to Taiwanese investors.

Investment partnership

The first ever Taiwan-ASEAN Strategic Investment Partnership Forum was recently held in the Taiwanese capital of Taipei. During the event, representatives from Singapore Malaysia, Vietnam the Philippines and Thailand spoke to Taiwanese investors about investment opportunities within their respective nations, which the investors might be interested in taking advantage of.

News portal Nation Multimedia reports that the representatives were welcomed to the event by Wang Mei-Hua, Taiwan’s Vice Economic Affairs Minister. During the forum, she pledged that the nation’s government will further develop the ‘New Southbound Policy,’ enhancing economic and trade relations with ASEAN countries in fields such as trade, investment and industrial collaboration.

ASEAN opportunities

James Huang, the Head of the New Southbound Policy Office, also spoke with ASEAN representatives. He noted that ASEAN has the seventh largest economy in the world and that each member state’s economy grows at between 5% and 7% per year, presenting major opportunities for Taiwanese investors. ASEAN’s economy is set to keep expanding, according to the Malaysian Second Minister of International Trade, who recently said that it could become the planet’s fourth largest by 2030.

Various representatives spoke specifically on why their nation could appeal to Taiwanese investors. Felicitas Agoncillo-Reyes, the Assistant Secretary for the Philippine Board of Investments’ Investments Promotion Department, made a compelling argument. She noted that unlike many nations, the Philippines does not have an aging problem. It has a young, educated workforce that is largely fluent in English, which could prove advantageous to Taiwanese investors.

Adding further, she suggested that Taiwan’s New Southbound policy and the new Filipino President’s policy can complement each other, making for a lucrative partnership. Do Nhat Hoang, the General Director Vietnam’s Foreign Investment Agency, made a similar argument. Hoang noting that his country’s large, young workforce makes it a highly competitive prospect for Taiwanese investors.

Tapping potential

Taiwan’s New Southbound policy, which aims to promote closer ties between Taiwan and South Asia, could prove lucrative for ASEAN countries. Commenting in April 2016, Huang explained: “The new southbound policy is Taiwan’s new outward-oriented economic strategic plan that puts people at its core… As a five-year plan, [the new government] would be pushing bilateral interaction and cooperation of human resources, industries, investments, education, culture, tourism and agriculture between Taiwan, ASEAN and South Asian nations to build a new partnership with these countries.”

Going further, he noted that “With Taiwan’s geographic position and economic conditions, it could be ASEAN and South Asian nations’ best economic and cultural partner.” The World Economic Forum, a Swiss-based non-profit designed to promote public-private co-operation, ranked Taiwan 15th in its Global Competitiveness Report 2015-2016. Therefore by attracting Taiwanese investors, ASEAN member states will be able to generate major economic growth.

Adding further, Huang said that “many nations that might be affected by the policy are also interested in it and have engaged in constructive discussions with us.” This became clear at the Forum, where representatives from countries such as the Philippines and Vietnam strove to assure investors that they have the young, capable workforces necessary to generate strong return on investment. It is clear that ASEAN nations will need to market themselves affectively going further, to ensure they benefit economically from the New Southbound Policy.

Htet Tayza.

IBM to Establish Its First R&D Centre in Singapore

Htet Tayza: IBM

Global technology firm IBM recently announced that it will open its first blockchain research and development (R&D) centre in Singapore. Htet Tayza explores what this development could mean for this incredibly important financial technology (fintech).

Fintech hub 

In its most recent Global Financial Centres Index, think tank X/Yen Group recently appointed Singapore Asia’s most prominent financial centre. The city-state has more than 200 banks, an increasing number of which are basing their regional headquarters in Singapore. Increasingly, Singapore is striving to capitalise on its reputation as a significant Asian financial centre to develop a thriving fintech industry.

Singapore’s central bank has pledged to invest US$167 million in fintech projects over the next five years. The city-state also recently announced it new approach to fintech regulation, which will strive to provide fintech firms with the type of business environment they need to grow. Strong governmental investment, coupled with favourable regulation, is drawing a range of fintech companies to Singapore. IBM has now said that it will work with Singapore’s Economic Development Board and Monetary Authority to open its first ‘Centre for Blockchain Innovation’ in the city-state. 

R&D centre 

This R&D Centre will strive towards delivering a range of technology pilots throughout the trade and finance industries over the next three years. It will also aim to tap into Singapore’s technical talent pool and enhance IBM’s work with the Linux Foundation’s Hyperledger platform, an advanced blockchain technology. By getting involved, the Monetary Authority of Singapore (MAS) aims to boost ties between the city-state’s banks and fast-growing fintech sector.

Commenting, MAS Chief Fintech Officer Sopnendu Mohanty was quoted by Fintech Extra, and industry publication, saying: “The financial sector is well-placed to play a leading role in Singapore’s vision of being a Smart Nation. Given that technology is a key enabler of financial services, MAS is pleased to continue to work with companies like IBM to promote technology innovation in finance, and encourage the adoption of safe and efficient technology with the financial industry.”

Right innovation hub 

IBM will collaborate with parties such as the Port Authority of Singapore (PSA), the largest container transhipment port on earth, to develop a “trade ecosystem.” This will link the trade and logistics sectors with emerging fintech. IBM is currently in the early phases of implementing blockchain technology and bitcoin-to-fiat payments in transnational container shipment.

Speaking out, PSA International’s Group CEO Tan Chong Meng noted: “These are fields that we can add value to with our expertise as a hub port operator in Singapore and around the world. We believe new technologies such as blockchain have the potential to reinvent multi-party business transactions and that Singapore is the right innovation hub to carry out field trials of such technologies across a variety of uses.”

Tapping potential 

IBM defines blockchain as “a technology for a new generation of transactional applications that establishes trust, accountability and transparency while streamlining business processes.” Blockchain has the ability to keep data very secure, which has made it an incredibly valuable innovation for the global financial services industry, which is often a favourite target of cyber-criminals. In a recent poll of 500 financial services executives from 56 nations, 60% agreed that blockchain is the most important innovation since the internet, due to its ability to protect consumer data.

Blockchain’s potential is enormous. If businesses across the world invest in blockchain R&D, they could create innovative new solutions to the most pressing problems the global financial services industry is facing at the moment, such as cyber-crime. Through its work with the Linux Foundation, IBM is fast becoming a world-leader in blockchain R&D. By choosing to create its first blockchain R&D centre in Singapore, IBM could potentially take advantage of the city state’s increasingly thriving fintech scene to take blockchain technology to the next level.

Htet Tayza.

Singapore to Host First Global Blockchain Conference

Htet Tayza: Singapore

Htet Tayza comments on new reports, which suggest that the first global blockchain conference will be held in Singapore next year.

Blockcon 2017 

This Blockcon 2017 conference, which will be held between the 28th and 29th March, will be organised by UBM Exhibition Singapore Pte Ltd and The Singapore Fintech Consortium Pte Ltd. It will be held at Singaporean Hotel Marina Bay Sands and on focus on innovation in emerging financial technologies (fintech) such as cryptocurrencies and blockchain.

Over 1,000 innovators and professionals from the global blockchain community, hailing from a diverse range of backgrounds, are expected to attend the conference. The guest list will include everyone from investors and financial industry executives, to regulators and entrepreneurs. Blockcon 2017 will feature a variety of interacting networking events, demonstrations and inspiring talks.

Innovative fintech 

Commenting, Singapore Fintech Consortium Co-Founder Gerben Visser said: “Blockchain has the potential to redefine numerous value chains, exchange platforms and business processes. We observe fascinating ‘proof of concepts’ being tested and user cases being developed not only within the financial service industry, but across other major industries and public sectors.”

Speaking about the topics and focus of Blockcon 2017, Visser was quoted by Econo Times, a digital finance portal, continuing: “Some of the key themes, topics and applications that are being explored are related to identity, authentication, fraud, record keeping, ‘smart’ self-executing contracts and various forms of transfer of digital assets, value and data.”

Unique knowledge platform 

Econo Times reports that 60 speakers are expected to hold sessions at Blockcon 2017. Conference attendees will be able to learn more about blockchain collaboration, culture, competition and regulation at these events. It will also feature live panel discussions which will explore how blockchain solutions can be successfully implemented in the modern global financial landscape.

These discussions will also broach the topic of how blockchain can be applied by financial services companies to facilitate accessibility, consumer trust and safeguard data integrity. Commenting, UBM Exhibition Singapore Managing Director Paul Wan said: “We believe Blockcon 2017 will provide a unique knowledge exchange platform, facilitate partnership opportunities across the Blockchain ecosystem, as well as educate financial participants and stakeholders on the potential applications.”

Capitalising on blockchain 

Blockchain is a technological ledger which records data. Blockchain ledgers cannot be altered or tampered with, making the technology a very effective data protection tool. Cyber-security is a major problem for the global financial services industry, according to Symantec, an online security firm, because these businesses are very attractive to cyber-hackers. With global mobile banking users set to increase, a report from KPMG writes, from 0.8bn in 2014 to 1.8bn by 2020, it is critical that financial services embrace technologies like blockchain to keep consumer financial data safe.

Financial services executives are fast-realising the value of blockchain. It was recently hailed as the most important innovation since the internet, in a poll of global financial services sector executives carried out by Marketforce. Within this context, Blockcon 2017 could prove hugely beneficial for the worldwide financial services sector. By exploring blockchain and cryptocurrency innovations, the event could provide the sector with new solutions for improving customer service going forward.

Htet Tayza.

ASEAN Provides Major New Resources For MSMEs

ASEAN flags. Htet Tayza discusses the ASEAN region.

The Association of South East Asian Nations (ASEAN) has launched an initiative which will provide major new resources for micro, small and medium-sized enterprises (MSMEs). Htet Tayza comments.

MSME Academy

Filipino information agency GOV PIA reports that ASEAN has recently launched a new online academy for MSMEs in the region. This is academy will provide MSMES with business information and courses via computers, tablets and smartphones. The academy was launched at the recently-held inaugural ASEAN Coordinating Committee on MSME (ACCMSME) meeting in Singapore.

Commenting, Dr Wimonkan Kosumas, the Deputy Director-General of the Office of SMEs Promotion (OSMEP) in Thailand, said: “The launch of the academy supports ASEAN’s efforts to strengthen the development of ASEAN MSMEs through training materials that will contribute to knowledge enhancement and uplift MSMEs’ capacity and capability in doing business in the Community.”

Valuable MSME resource 

The academy will supply regional MSMEs with classes and information on a range of topics. This includes trade and logistics, technology, operation, marketing, management and financing and accounting. Course materials have been provided by Hewlett Packard, PayPal, Microsoft, MasterCard, Google, Facebook, Baker & Mackenzie, Procter & Gamble and the International Labour Organisation.

The business information provided by the academy is region-specific, meaning that it will give ASEAN MSMEs the insight they need to upgrade and expand their operations over time. Speaking out on the creation of the academy, ACCSME Chair Mr Nguyen Hoa Cuong said: “Developing entrepreneurial education and learning programmes are a key plank of the ASEAN Strategic Action Plan for SME Development 2025 and we are pleased to see the first phase kick-off today.”

Receiving US backing 

The academy is a joint ASEAN/US effort. It has notably been supported by the US-ASEAN Business Alliance for Competitive SMEs. Launched in March 2014, the Business Alliance is a three-year public-private partnership between the US-ASEAN Business Council (US-ABC) and the U.S. Agency for International Development, via the ASEAN Connectivity through Trade and Investment project.

Explaining how the creation of this academy can benefit both American and ASEAN businesses, US-ABC Vice President Michael W. Michalak recently said: “The goal is to further develop the academy into a one-stop, online resource for learning about regional and international markets, latest technologies, and for access to service providers and more financing opportunities, and its online presence will substantially expand the reach of US-ABC programs to support MSME. Courses are available for start-up businesses, as well as for more developed enterprises.”

Htet Tayza’s comments 

The ASEAN economy holds incredible potential. Commenting recently, Malaysian Second Minister of International Trade and Industry Ong Ka Chuan suggested that the recent integration of ASEAN member state economies could allow the organisation’s collective economy to become the fourth largest on earth by 2030. He also noted that thanks ASEAN’s recent efforts to move into global markets, the bloc should see its gross domestic product (GDP – the most comprehensive measure of economic expansion) grow by US$4.7tr by 2020.

In order to tap into this economic potential, it is vital that ASEAN member states make it as easy as possible for regional MSMEs to conduct business efficiently. Official figures show that MSMEs account for between 88.8% and 99.9% of businesses across ASEAN member states. With this new academy, ASEAN has provided its MSMEs with the tools they need to improve operations. This will potentially allowing them to increase profit, ensuring that the bloc can tap into its economic potential.

Htet Tayza.

Blockchain Labelled the Most Significant Innovation Since the Internet

Blockchain Labelled the Most Significant Innovation Since the Internet

Htet Tayza reports on the findings of a new survey, which showed that a majority of global financial services industry executives believe blockchain is the most significant innovation since the internet.

What is blockchain?

Blockchain is a technological ledger which records data. However a blockchain ledger is not stored in one place, it’s distributed throughout thousands of computers across the planet, so blockchain technology is incredibly transparent. When the ledger is updated this change occurs for everyone in the network at the same time, so it cannot be altered or tampered with.

Explaining the effectiveness of blockchain, the BBC writes: “The distributed nature of a blockchain database means that it’s harder for hackers to attack it – they would have to get access to every copy of the database simultaneously to be successful. It also keeps data secure and private because the hash cannot be converted back into the original data – it’s a one-way process.”

Significant innovation 

This has made blockchain technology somewhat appealing to the global financial services industry. This finding comes from a recent study carried out by Marketforce and commissioned by information technology provider Cognizant and business applications supplier Pegasystems. The firm questioned 500 financial services executives from 56 countries throughout the world.

Technology portal Beta news reports that the survey found that 60% of respondents with some knowledge of the technology said that blockchain is the most important innovation since the internet. However, 35% of financial services executives surveyed admitted that they have not heard of blockchain. Among those respondents who have heard of blockchain, 23% admitted that they do not understand what the technology actually is.

Jury is out 

Marketforce also found that blockchain is seen as a threat in some quarters of the financial services industry. Over half (53%) of respondents argued that blockchain will have a disruptive impact on the worldwide clearing and settlement markets going forward. Nearly half (45%) of those questioned think that coupled with peer-to-peer lending, blockchain wallets could “end banking as we know it.”

Commenting Pegasystems Director Graham Lloyd said: “For many, the jury is still out on whether or not blockchain will be a force for good or not. However, we do know there’s no longer room to be complacent about such a potentially significant source of disruption. Banks and insurers must prepare themselves for the day when they might have to manage blockchain-stored customer data — whether it be their personal information, details of their assets, or even real-time data from virtual currencies.”

Htet Tayza’s analysis 

Increasingly, consumers are utilising technologies to execute financial transactions. A report from KPMG, for instance, indicates that the number of global mobile banking users will rise from 0.8bn in 2014 to 1.8bn by 2020. A paper from Symantec, an online security firm, indicated that financial services businesses are a top target for cybercriminals. As consumers turn to new financial technologies (fintech), cybercrime could become a more pressing problem for the financial services.

Explaining, Symantec noted that “attacks against the finance industry are becoming increasingly sophisticated and highly targeted.” Therefore, blockchain could serve as an asset, rather than a detriment, to the international financial services sector. It is harder for hackers to break into a blockchain database, so financial services companies could use the technology to safeguard vital consumer data from cybercriminals. This would ensure that they can capitalise on the rapidly emerging global digital finance revolution effectively.

Htet Tayza.

Why Are Fintech Firms Looking at Consumers’ Social Footprints?

Htet Tayza: fintech

Increasingly, financial technology-based (fintech) online lenders are looking beyond a consumer’s credit score and examining their social media activity to determine their loan eligibility. Canadian newspaper The Globe and Mail recently featured an article which examined what fintech firms are looking at when they scrutinise a consumer’s social media activity.

Assessing applicant creditworthiness  

Invoice funding platform Fundthrough’s CEO Steven Uster spoke to the newspaper. Commenting, he said: “Everything that you do on the Internet is tracked… Someone who spends a lot of time on social media has a different credit profile than someone who doesn’t.” Uster explained how various social media factors are used by firms like Fundthrough. For instance, five-star reviews on TripAdvisor are seen as a positive indicator of business’ creditworthiness, because they illustrate success.

Uster added that having thousands of friends on Facebook can be seen as a negative by online Fintech lenders, however, because this indicates that the company in question spends more time online than actually developing their operations. Uster further pointed out that even the way an applicant fills out a loan form can be used by business’ like Fundthrough. If the form is submitted at 4am, for example, this implies that the applicant may be more desperate, so they may pose a more significant risk.

The Fundthrough CEO suggested that some fintech companies may look at an applicant’s personal social media pages, as well as their business’ profiles, depending on the nature of the loan. Uster explained that these metrics are useful to online fintech lenders because they authenticate applicant-provided information, making it easier for companies to more accurately assess loan eligibility.

Paying due diligence 

Personal lending firm Progressa’s CEO Ali Pourdad also spoke to The Globe and Mail. He noted that lack of due diligence was a significant contributor to the 2008 economic crash. This inspired fintech companies to both examine loan applicants more carefully and widen the definition of creditworthiness to make more informed decisions. Explaining, Pourdad said that “we take a very close and detailed look at their financial situation” by using computer algorithms to analyse big data, so they can assemble a robust credit profile for the consumer in question.

Adam Nanjee, the head of the fintech cluster at MaRS, a Toronto-based innovation centre, added that people are all too willing to provide personal data to access capital from online lenders. He noted that practically everyone under 35 who is looking for loans wants credit to be as mobile as they are, adding that “no millennial is going into a bank branch to apply for a loan these days.”

Looking at Canada as an example, Nanjee said that the country’s high degree of mobile penetration has developed a desire for immediate services among consumers. Nanjee point out that in the past two quarters alone, almost 20 alternative financing providers have been created. This illustrates that demand for convenient on-the-go financial services is boosting fintech online lending.

Htet Tayza’s analysis 

Also commenting, CEO of Vancouver-based Merchant Advance Capital, David Gens, said: “The future of lending that people talk about at various conferences is that it’s really about the click of a button.” Gens makes a valid point; in this increasingly digitised world consumers desire convenience. A study from Research and Markets, forecasts the Global Fintech Investment will expand at a Compound Annual Growth Rate of 54.83% during 2016 to 2020. This suggests that consumer demand for technology-based financial services is only set to keep expanding.

With demand rising, online fintech lenders are operating in an increasingly competitive market. By analysing the consumer’s social media history, fintech firms can both more accurately assess their creditworthiness and provide them with tailor-made financing vehicles. Therefore, online fintech lenders are analysing their customers’ social media footprints to safeguard both their own operations and the interests of their customer bases.

Htet Tayza.

Financial Services Are Starting to Define ‘Conduct Risk’ 

Htet Tayza: Financial Services

A new study has suggested that the worldwide financial services sector is starting to define the concept of ‘conduct risk,’ but has a long way to go before putting it into practise. 

Conduct risk 

Information company Thomson Reuters defines conduct risk as “the risk to the delivery of fair customer outcomes, or to market integrity.” This concept can involve all parts of a firm’s governance, risk and compliance framework. It can cover issues such as preventing market abuse, managing conflicts of interest and constructing audit procedures for new product development processes.

Experts advise companies to implement a strong conduct risk framework, in order to manage their risk culture. Although conduct risk management is constantly evolving, generally this policy should achieve several core aims. This includes assessing conduct risk, establishing appetite for conduct risk which is signed off by an organisation’s board, measuring and monitoring vital conduct risk metrics and managing and communicating conduct risk issues to employees.

Rising awareness 

Online financial portal Value Walk reports that Thomson Reuters has just released its Conduct Risk Report 2015/16. Following up from the previous year’s report, in this study, Thomson Reuters polled over 260 compliance and risk practitioners from financial services companies in Europe, the Americas, Asia, Africa, the Middle East and Australia.

The research was designed to ascertain how the global financial services industry is defining and responding to conduct risk. More financial services firms are defining conduct risk. Declining from 81% in 2014, now 64% of respondents have not cultivated a working definition of conduct risk. Internationally, there is agreement that conduct risk is about “culture, ethics, and integrity” and “corporate governance and tone from the top,” along with “conflicts of interest.”

Implementing strong initiatives 

Yet financial services still have a long way to go in terms of implementing conduct risk frameworks. Over two thirds (37%) of respondents said their firms have implemented a policy but it needs more work and resources, while 32% said their company’s policy was still in development. Meanwhile, 52% said that in the past year, they have noticed an increase in board-level focus on conduct risk and a similar number (51%) now have a senior manager who is responsible for this area at their firm.

Furthermore, 70% of those questioned agreed that the personal liability of senior managers would increase with greater regulatory focus on conduct risk. Commenting on the results of this study its co-author Stacey English, who is Thomson Reuters’ Head of Regulatory Intelligence, said: “Conduct risk is no longer a new concept and it is here to stay so financial services firms are seeing the importance of implementing a formalised approach to conduct risk inside their organisation – that starts with the creation of a working definition of conduct risk.

“G-SIFIs [Globally Systemically Important Financial Institutions] are leading the pack when it comes to defining conduct risk and implementing formalized conduct risk policies. We expect smaller firms to follow suit.” Just 43% of G-SIFIs do not have a working definition of conduct risk, declining from 74% in 2014. Also, 41% of respondents at G-SIFIs say their organisation has implemented a conduct risk framework which needs more work and resources.

Growing regulatory concern 

Perhaps most notably, 64% of those polled expect to see the costs associated with devoting time and resources to conduct risk rise this year. Increasingly, the global financial services sector is coming to realise that it must address conduct risk issues. By implementing robust conduct risk management frameworks, financial services companies can effectively manage issues such as conflicts of interest, to ensure they tap into lucrative markets while adhering to regulatory guidelines.

Htet Tayza.