DISRUPTION AND TRANSFORMATION IN THE BANKING AND CAPITAL MARKETS (BCM) SECTOR

R&C: Could you provide an overview of the trends and developments currently disrupting the banking and capital markets (BCM) sector? What risks and opportunities does disruption present for BCM companies?

Scanlan: Firms must consider key trends including the digitalisation of banking services. For example, artificial intelligence (AI) and robotic processing will automate an increasing number of organisational tasks extending to activities requiring judgment, such as know your customer (KYC) and fraud monitoring. There will also be new business models and the continued emergence of FinTechs spurring innovation, as well as the ability to harness data at scale, which is driving competitive advantage. Disruption creates both opportunities and challenges. Financial services are becoming increasingly real-time, tailored and seamless as part of customers’ day to day activities, and banks will need to respond to increasing customer, regulator and investor expectations requiring them to optimise operational and business models to deliver sustainable returns. Stepping up transformation efforts and actively engaging with an expanding ecosystem of partners will be essential to remaining competitive and relevant.

Balani: A key development has been the Russian sanctions, which are unprecedented in terms of scope, number and coordination, across Western nations. The sector is heavily regulated, meaning these firms need to follow compliance rules or risk penalties. While many have compliance programmes in place, they have been, and remain, unprepared for the screening volumes required. Environmental, social and governance (ESG) initiatives are also on the horizon and top of mind at board level. ESG could become compliance driven in the near future, which suggests firms need to consider screening policies that account for potential penalties and negative news for violation. Technology is a positive enabler for firms when it comes to addressing compliance requirements, with many tools boosting the effectiveness of AML screening, and software as a service (SaaS) solutions improving compliance cost structures.

Oct-Dec 2022 Issue

Encompass Corporation