It is SIBOS time and White Papers are being produced on all sorts of aspects of banking, payments and cash/treasury management. Deutsche Bank’s white paper on “Regulation driving banking transformation - Insights into the key regulatory developments shaping APIs, artificial intelligence, blockchain and cloud” is a studious and pretty rigorous 40+ page report which adopts the classic approach of describing (rather neatly) the global regulatory environment and then reviewing (with useful analysis of the problem structure and providing interesting data and opinions) each of these areas in turn, examining:
- What is it?
- What are the benefits?
- Current regulatory picture
- Key regulatory challenges and solutions
- What does the future hold?
Before drawing their overall conclusions.
(These sections are important summaries of what shaping APIs, artificial intelligence, blockchain and cloud and well worth browsing.)
Forward: Re-imagining banking
Thomas Nielsen’s (Chief Digital Officer, Global Transaction Banking, Deutsche Bank) entertaining forward finishes with, “Getting this right is something that can only be done through collaboration with regulators and a wide range of industry groups. We must be responsible. But we need to disrupt, or be disrupted.” This stark analysis of the position of the regulators and banks is continued in the conclusions.
The white paper concludes that, surprise surprise, the financial services industry will be transformed by technology and that regulation is almost certainly one of the most important factors. It concludes that conducive and forward-thinking regulation stands to be a major catalyst for a thriving and innovative banking industry. It insists that the regulatory approach needs to be:
- “Globally aligned – while cross-border solutions are, admittedly, challenging to achieve, global technology solutions will depend on them. Global sandboxes are the first step in this direction, yet it is important that regulators continue with this momentum.
- Technology-neutral – as with all regulation pertaining to technology, we stress the need for technology-neutrality, regulating the applications and outcomes, rather than the technology itself.
- Digitally relevant – while technology-neutral, regulation must remain relevant in today’s digital world.
- Embracing of new solutions – when cybersecurity solutions are provided by CSPs, it is important that market-leading solutions that can provide significant benefits to clients are accounted for.
- Industry-led – the optimal approach when addressing issues such as API standards, for instance, would be for the industry to lead developments, with support from the regulators.”
THE realistic goal
But these five points are rather general, what is really needed is summed up by Polina Evstifeeva, Head of Regulatory Strategy, GTB Chief Digital Office, Deutsche Bank who believes that, “Further regulatory alignment on a global level would greatly support the development of innovative technologies for global business. This is particularly important in the context of data protection and security standards – as long as the rules vary across jurisdictions, technological solutions will be constrained by local boundaries, diluting their potential to transform the industry. However, this doesn’t mean we have to establish a single global standard for regulation. The realistic goal here is attaining a threshold level of alignment across jurisdictions in order to unleash the full benefits.”
CTMfile take: Evstfeeva’s goal that all they - the banks and regulators, etc. - need to do is to “attain a threshold level of alignment across jurisdictions in order to unleash the full benefits” is spot on. It should be printed on tee shirts and be given to BIS, every central bank, and to SIBOS attendees.
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