From compliance complexity to market responsibility

Compliance matters are highly complex. To ensure the financial sector maintains its effort toward a sustainable financial system, it is key for the market to appreciate, in particular, bank’s effort and challenges as well as to promote the most ethical practices.

The financial world has paid the price for its past actions. Not only the bill to the regulators has marked memories, but people were impacted and changes those worldwide companies had to undertake are still on going.

As we have seen, issues were very different thus raising the complexity of the strategic decisions to make. Indeed, Client Interest Protection, Financial Security, Market Integrity or Fraud requires specific attention and different responses. In terms of business models, transaction sensibility is different for Market Integrity (e.g. product sensibility) from Financial Security (e.g. country sensibility). On the operating model side process to ensure Client Interest Protection (e.g. client financial knowledge) are different from process to ensure a strong Financial Security framework (e.g. client activity sensibility).

Adding to this complexity, one have to understand banks are extremely complex animals. For instance, within one single bank, requirements for Private banking is deemed to be different from Capital Market or even Asset management. But also, it may be different between client segments (Retail clients vs. Corporate vs Private clients).

Last but not least, as we have seen neither nationality nor activity geography are spared e.g 9.6bUSD paid by French banks for activities outside the US and 15bUSD for Swiss banks as well. To offer a global service to demanding and international clients, banks have to adapt to the strictest and customed rules everywhere to be able to provide an even service regardless of the location.

At the same time, banks focus on efficiency remains and to ensure a strong consistency in terms of compliance framework across the board, they have to consider synergies and common areas between operational performance and ethic.

Only when looking at the big picture can the market really appreciate what banks went through to cope with compliance rules. The will and capacity banks are demonstrating should give us confidence in their capacity to contribute to a sustainable financial system. With this understanding in mind, to reach a win-win situation, it is also up to the market to promote the most ethical actors and thus increase financial institutions brand value.

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