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Regulations aren't the real burden. Operational limits are

 

Regulations aren't the real burden. Operational limits are

Quickfire with Tapan Agarwal

Product Council Head of Risk Management & Strategic Initiatives, iGTB

1.Why is Sibos important to transaction banking?

Because there are key stakeholders from banks attending. I am responsible for the risk and compliance space and in that area there are a lot attending from the compliance functions from banks. So I get to meet them, showcase products, learn from them and from the compliance forums at SIBOS. There will be a whole series of lectures and talks on compliance KYC, due diligence and risk from the transaction banking perspective, all of which is relevant to me. During the year there are quite a few conferences, but SIBOS is certainly the biggest. Plus I get to meet a lot of stakeholders there. 

2.What's the loudest conversation at Sibos in risk? 

About customer due diligence and ultimate beneficial ownership of customers and how the changing regulations are impacting the time it takes to onboard them, and how it becomes a regulatory nightmare to onboard customers. It takes more time, is more complex. And the longer it takes, the more pressure you get from the business, because the business wants the revenue. Corporates get peeved when banks ask for the same documents again and again. So there are a lot of initiatives where you’re seeing KYC or due diligence offered as a service. These are gaining popularity. Like the SWIFT KYC registry. 
From a banks’ perspective, the ability to reduced false positives and reduce noise takes a lot of time, from an operations perspective, and they need solutions to help them do the adverse media screening very quickly. 

3.What stayed with you from last year?

I attended two years ago in Tokyo, and that time my focus was more on broader transaction banking than on risk. But I have no doubt that, in comparison to last year, the amount of focus on compliance and risk has increased. Last year, SIBOS would have focused only on payments and cash management plus liquidity. Plus trade, to an extent. But now it will give a big focus on KYC, due diligence, operational risk, compliance. This focus is really increasing year on year. 

4.What do you look forward to seeing at Sibos this year?

There's a need for new solutions that enable enhanced due diligence, leveraging technology such as AI, machine learning and natural language processing to mitigate commercial risk. Of course, compliance is where the rubber meets the road. You know what, I think we have just the thing.

5.To banks, change often proves painful. What do you see are the biggest pain points from changes over the past year?

In terms of changes, the entire landscape is changing because of newer tech. if you look at everything the bank did earlier like lending, payments, all are getting disintermediated by technology. Lending is the mainstay of banks, but today you now have companies such as fundingcircle.com, which can give loans in one week! Really amazing how they manage the credit risk. Banks have to completely rethink the way they do business. Same with payments. Entire approach has changed. Look at transferwise etc. able to offer the same transaction at one third of the cost. Not that they don’t comply, they are still approved, just that they use technology in a different way. Not encumbered by legacy tech/infrastructure/processes.

So banks must sit up and understand how to leverage tech and AI to offer products in a differentiated way, otherwise they will lose market share to such innovative start-ups. Even in the realm of compliance and risk, banks are under a lot of burden with regulation, but that burden is felt more because of internal operational bottlenecks.. Sibos is an opportunity to share ideas. Banks are investing in these new companies, and that is good for the whole industry. 

 

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