Zurich – Managing data in the financial services industry is rapidly evolving. Blockchain technologies are being used to make things more efficient and cost effective for both financial firms and regulators.
By Alastair Greener, Business Reporter
Marco Selva, Managing Partner & Tom Debus, Managing Partner, Integration Alpha
Marco Selva, CEO of Integration Alpha says: “The cost of being compliant is extremely high and getting higher and higher. You have to come to more efficient solutions.” Players in the industry are finding they need to adapt quickly to make itself more efficient or risk being left behind. “The question is always if you are not fast enough moving up the path, up the ladder you might end up dead,” says Selva. “It might cost you to go out of business as your costs will eat your margins up.”
According to Tom Debus, managing partner at Integration Alpha a three-step approach is needed by financial players to make the data compliancy process more efficient. He adds the first two steps, involves companies moving from an in-house system to a decentralised blockchain approach. “Today’s reality basically is most banks and companies actually do everything in-house,” Debus says. “They have teams that collate the data. They have teams that calculate all those key figures and measures that the regulators want to see. “They have people that verify and reconcile all of this from front-to-back. They send it on to regulators and do the Q&A with the regulators. All of that today happens in-house with most of the banks. But there is no competitive advantage of doing it internally.”
Through using a decentralised system, Debus explains banks can dump all of the raw data into a pool supported by blockchain technology like a shared utility service. Each piece of data is then assessed to a set of standards, which the regulators approve by a pooled group of people, taking out the need for banks to do it internally.
Debus points out this makes it more cost effective as banks no longer have to have that expensive expertise for themselves of doing the same old number crunching over and over. As many banks departments are fragmented it helps them obtain a more integrated approach to managing data. “In today’s world a lot of time all of that work happens in many different silos,” he says. “If you look at one of the global banks they have 130-150 systems just for credit risk and even pooling this for a single bank into a single (blockchain) utility is already helping to decommission a lot of different systems.”
Selva adds, as every bank has to have the same reports, by using a pool utility system the raw data can become standardised.
According to Debus it also changes the paradigm of how the regulators view data. It gives regulators the advantage of seeing all potential compliance risks in real time rather than months down the line when a report is compiled and is the third step in the approach. Debus says: “Whenever a single transaction happens your liquidity Key Performance Indicator (KPI) or credit risk KPI are updated. The regulator can see the updated information at all times. We can then do real time cockpit steering of the financial services economy.” It is estimated that regulatory reporting in Europe for finance alone costs the industry 80 billion euros, by using a blockchain approach costs can be dramatically reduced. The technology also eliminates the need for expensive in-depth audits done manually in past.
Selva says: “Certain regulators see that as a huge advantage for their own market, the cost of doing business of their own banks is extremely good. That for them is a good kind of marketing.” We as a solution provider are able to generate efficiencies of scale and really own that pain point on behalf of the client. So we become the solution on an ongoing operational level and the banks can move back on focus on their core business.
Über Integration Alpha
2014 von vier Partnern mit jahrzehntelanger Data Management-Erfahrung im Finanzsektor gegründet, zählt das inhabergeführte Schweizer Unternehmen aktuell ca. 60 Experten für die Bereiche Finanzreporting, Compliance, Daten- und Projekt-Management. Das RegTech Unternehmen fokussiert sich auf skalierbare Regulatorische Reporting Services sowie Data Science basierende Produkte wie KYC (Know Your Customer) und Compliance. Als erstes Unternehmen in der Schweiz bietet integration alpha umfassende Lösungen für Regulatorisches Reporting aus einer FINMA konformen Cloud als BPO-Lösung an. Das Unternehmen mit Hauptsitz in Rotkreuz (ZG) hat Niederlassungen in Indien, Serbien und Brasilien. www.integrationalpha.com