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Top 10 challenges for investment banks in 2015: Embracing regulations (Part 1)

Beat Monnerat, Accenture's senior managing director of financial services for Asia Pacific | Dec. 12, 2014
For the seventh consecutive year Accenture outlines ten of the key challenges facing investment banks in the coming year. For the next ten days, Accenture will focus on a challenge a day.

Beat Monnerat of Accenture 
Beat Monnerat of Accenture

The height of the global financial crisis was six years ago, yet investment banks are still grappling with the impact. Some of the most impactful repercussions are the waves of regulation. An even more highly-regulated environment has become the new normal.

Keeping abreast of the regulations has consumed management attention and valuable resources.  The challenge is how can CIOs stay on top of these regulations in a strategic, cohesive manner that takes into account a holistic, long-term view.

Given the deadline-oriented nature of regulations, it is easy to fall into a short-termism frame of mind, letting each portion of the business respond to regulatory demands.

However, there are pitfalls to this decentralised response. A decentralised governance structure leads to decision-making subject to individual agendas and exacerbated by the siloed cultures of different business divisions. Throwing resources at a regulatory problem, without wider changes to the operating model or decision-making process, can result in solutions that are complex, inefficient and inflexible.

At Accenture, we advise taking a firm-wide, business-focused approach. Operational and technology change should be run in tandem with business model reviews to enable a more structured, effective and cohesive outcome that helps to avoid complexity. Furthermore, it should be a top-down approach. Banks should address problems caused by a decentralised structure by simplifying and strengthening governance frameworks.

Finally, it is vital to ensure that the right people are hired for the job; a team of experts with a sound understanding of compliance, firm-wide risk requirements, process excellence and technology capabilities must be assembled. That team can help standardize data, assess and control compliance more easily and improve their reaction time to new requirements, creating a more nimble, efficient and accurate compliance environment. For some banks that may require redesigning the financial institution's core banking platform.

We encourage banks to see regulatory change as an opportunity rather than a challenge: with the right strategy in place, regulatory change can be the catalyst for tangible business benefits.


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