"Technological innovation, a key factor in the increase in regulatory requirements for GFIs"

Philippe Perles
Philippe Perles, NOVEO Conseil

With its latest communiqués announcing the authorisation of the 3rd registration body and the 5th supervisory body (SB), FINMA fulfilled its contract on schedule. The institutional prerequisites for the implementation of the Financial Institutions Act (FINMA Act) and the Financial Services Act (FSCA) have been completed. Independent asset managers (EAMs), trustees and customer advisors can now initiate the necessary steps to fulfil their obligations to register and obtain authorisation under the FINMA Act and the SFSG in good time.

 

While this represents an undeniable asset for the profession, the fact remains that these new regulatory requirements will be in addition to those already in place with respect to both the current SROs and the custodian banks with which the EAMs work.

However, within the ecosystem in which the financial groups operate, and in particular with regard to these regulatory aspects, a majority of players have already taken the lead in terms of technological innovation. At the level of FINMA, all requests for authorisation from EAMs and trustees are processed through its EHP platform, which centralises the information and documents required for registration and interacts between EAMs and SBs in the context of their registration.

 

Some SBs, such as OSIF, have opted for a fully digitised approach to their mode of operation where their platform will retrieve the authorisation requests of the EAMs directly from FINMA’s EHP platform. This will make it easier to retrieve the files, and thus to process this information, avoiding all potential sources of error, while respecting confidentiality and in complete security!

 

As for the custodian banks, a large majority of them have already initiated a strategy of digitisation and dematerialisation of information, particularly on onboarding and compliance processes. Most of them have equipped themselves with tools adapted to the processing of this data, in parallel with work on optimising their processes. Each entity already uses its own tools and standards.

 

Finally, as far as EAMs are concerned, many of them, especially the large structures, have equipped themselves with PMS-type tools to facilitate client management and reporting, others have turned to outsourcing services, especially for portfolio consolidation, and a majority rely on the solutions that custodian banks make available to them for order transmission and client reporting!

 

However, nothing has really been thought out or developed yet in terms of compliance exchanges between financial groups and their custodian banks!

 

So we can already see that, at different levels of the value chain, the main players have taken the step of technological innovation, each according to its own needs but without necessarily much consultation between them.

 

However, in recent months, a new player in technological innovation, and more specifically in the Blockchain, has appeared in the wealth management industry to facilitate compliance exchanges between financial groups and their custodian banks through its “Wecan Comply” platform.

 

The concept, which was developed in close collaboration with a panel of EAMs and custodian banks, is aimed above all at reducing the workload inherent in all compliance processes, sharing information and documents in real time, while respecting confidentiality and in a highly secure environment!

 

Our ambition is clearly to become an industry standard!

 

At this stage, the benefits are multiple, both for EAMs and custodian banks. It will make it possible to reduce operational work and achieve a significant reduction in operating costs. At a time when cyber security is a priority, the sharing of information between the parties will be secure, and the EAM will retain control of its data on a platform benefiting from the highest standard of security. The efficiency of processing will therefore be improved, notably by avoiding duplication and potential sources of error in the intelligence of compliance-related information in their interactions. For all parties involved, this will result in undeniable time savings thanks to improved processing times.

 

And in the end, thanks to technological innovation, it is an opportunity for both EAMs and custodian banks to spend more time on their business priorities through high value-added products and services for their customers rather than on regulatory requirements that are only increasing over the years.

 

To conclude, it is important to mention here the fact that the Wecan Comply project is only at its very first stage! While it is already delivering productivity gains, efficiency gains and cost reductions, it represents the beginnings of an ongoing revolution that will transform the wealth management industry and the relationships between custodian banks, EAMs and their respective clients.

 

Tomorrow, that is to say in a few months, the Wecan Comply platform will expand its ecosystem and will be able to establish links with other registries that will allow data updates and facilitate information exchanges.

 

The train of technological innovation is on the move, it will transform our society in all its dimensions, the world of finance will not escape it!

Biography

 

Philippe Perles

Philippe Perles has more than 30 years of experience in consulting, private banking and international trading in Switzerland and Europe. Before participating in the creation of Noveo Conseil, he held important management positions with consulting firms in Switzerland. He was also a member of the Executive Board of Crédit Lyonnais (Suisse) SA and his career path has included various management positions in the Private Banking industry. Philippe is also an independent director of a number of banking and financial institutions, including Banque Edmond de Rothschild (Suisse) SA, Banque Hyposwiss Private Bank Genève SA, Bedrock Holdings SA, Inoks Capital SA. He is also a member of the Committee of ARIF, a self-regulatory body (SRO) within the framework of the Anti-Money Laundering Act (AMLA) and Chairman of OSIF, the Supervisory Body of Financial Institutes within the framework of the LSFIN, LEFIN. Philippe holds a degree in commercial and industrial sciences from the University of Geneva.

 

Description of NOVEO Conseil

 

NOVEO Conseil is a Strategy, Management and Organisation consulting firm dedicated to the financial and services sectors. Established since 2005 in Switzerland, France and Luxembourg, NOVEO Conseil supports its clients through their strategic thinking and transformation projects in order to help them achieve their efficiency and profitability objectives. Its service offer includes strategic projects, operational excellence, compliance, digital transformation and data management.

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