If 2013 was a year of revelations in the UK banking industry – with most of them being ugly hangovers from the pre-crash days – 2014 is set to be a year of sober improvement and studied reflection for senior figures in the industry. In the UK, the FCA’s use of attestations in the final few months of 2013 have been a signal of determined intent. These agreements, where senior figures are asked to assume personal responsibility for their business’s regulatory compliance, have raised the ugly spectre of criminal charges for senior figures should the substance of their attestations prove unfounded. For most, however, they have merely focussed the minds of senior figures on compliance, with regulatory rectitude, and the technology that enables it, becoming an ever more central concern for those in charge of overall strategy. I have certainly noticed a trend whereby senior bankers are thinking more in terms of risk – and that is systemic risk at an industry and economy-side level – rather than solely in term of compliance: the spirit, as well as the letter of the law.
This trend is reflected elsewhere around the world, and with CRD4, Basel 3 and parts of Dodd Frank, as well as the Volcker rule and the Vickers recommendations all coming into force, even the most senior bankers are being compelled to consider the why (these rules came to be in place) of industry regulations, rather than just the how (my company can obey them at the lowest possible cost). Coupled with that is a real improvement in communications, not just between the regulators and the banks, and the banks and technology providers, but also between the regulators and the technology providers – a vital third pillar of the system. With that third channel of communication in place, it should be much easier (and much less costly) to implement and refine the business-wide IT architectures that are needed to support and secure the compliance programmes that accompany complex and stringent industry regulations. Working with banks and technology vendors in such a tripartite manner will do a great deal to help regulators to promote stability and sustainability in the global financial service industry. That’s good for banks, good for business, and good for the economy as whole, and I hope to see it become commonplace in 2014.