Machine learning and big data

Big data

A few posts ago, I wrote about the impact of the ‘Findustrial Revolution’ on the financial community. According to McKinsey, there are now 20,000 FinTech companies in New York and London alone.

This seems to be driven by a confluence of events: tougher regulation, massive pressure on cost, newer technologies and thousands of technologists leaving the incumbent banks full of ideas, money and time to disrupt the old model.

Do regulators control or encourage these changes? Does innovation make the financial system better and safer, or more risky?

Several governments are making concerted efforts to attract and encourage more of this activity in their countries, with the UK, US, Israel and Japan leading the charge.

The ‘Findustrial Revolution’ is no longer a question of ‘if’ but a question of ‘when and how.’ (more…)

A global information and intelligence platform to combat modern day slavery


This week Thomson Reuters unveils a potential new weapon in the fight against modern day slavery. We are inviting the community of anti-slavery organizations to work with us to create a global information and intelligence sharing platform.

The International Labour Organization estimates forced labour is a $150 billion industry which enslaves some 21 million people.

The reputational risk to companies unwittingly exposed to slavery in their supply chain is now added to a real legal risk. At our anti-slavery seminar this week, attended by more than 170 people, I sat with Kevin Hyland, the UK’s anti-slavery commissioner and therefore the chief enforcer of the Modern Slavery Act. The Act requires firms to report formally on how they are seeking to combat slavery across their supply chains. And since those supply chains routinely span countries and continents the Act has global reach.


Message to sports chiefs: stamp out bribery or lose your sponsors


This week suspended FIFA president Sepp Blatter made some jaw-dropping revelations to Russia’s Tass news agency about how the World Cup bidding process was run. But football’s sponsors will also have noted this observation from Blatter:

“You cannot destroy FIFA,” he said. “FIFA is not the Swiss bank. FIFA is not a commercial company.”

This follows hard on the heels of comments from Formula 1 chief Bernie Ecclestone, who defended Blatter on Russian TV, claiming corruption should be considered as a tax that has to be paid: (more…)

China’s golden era – of interconnectivity

China's President Xi Jinping and Britain's Prince Philip review an honour guard during his official welcoming ceremony in London, Britain

China dominated the headlines in the UK this week. As its president, Xi Jinping, arrived in London with all the pomp of a state visit, the media turned its focus on how and why China was now being considered a strategic trade partner for the UK, with some £40 billion worth of deals signed during the visit.

Before Premier Xi’s visit, the UK Government keenly briefed journalists on the dawn of “a golden era” of cooperation between the two countries. And at a dinner at London’s Guildhall, where the Premier spoke warmly of Britain and its culture, I heard for myself a speech which contained more emotion and affection than the usual statesmanship expected of a visiting dignitary.

China is indeed entering a golden era, though not exclusively with the UK, and not perhaps in quite the way the Government intends. It is a golden era of interconnectivity, as the country creates myriad links to the world’s financial systems. For instance it was interesting how many delegates attended from Canada.

This interconnectivity includes information networks, of course, and just a few weeks ago I saw for myself in Shanghai how busily the financial sector was forging these vital connections. Such links will help them to attract foreign investment for their businesses and to import goods for their growing middle class, as well as maintaining their thriving exports. (more…)

Emissions scandal – the LIBOR moment for motor manufacturers?


As I write we are in the opening days of a reputational crisis for the world’s biggest carmaker which could conceivably have major ramifications for the entire automobile industry.

Volkswagen, the “people’s car,” has admitted to installing software into its diesel cars to cheat on emissions. This is not just financial fraud, then: it has immediate environmental implications, as it means toxic gases emitted by VW cars were way beyond legal and environmental limits. It was not an accident, nor a cover up, but was allegedly intentional.

It has all the hallmarks of the LIBOR scandal: US regulators finding European companies cheating the law, loss of trust, multi-billion dollar fines, reputations and personal careers destroyed. But this crisis is a public issue which impacts health, trust, consumer confidence, the wider reputation of the car industry and German engineering. A 20 percent share price decline for Volkswagen might just be the beginning.

So what are the lessons learned and what should car manufacturers do now? (more…)

Human trafficking – Big data will help combat a big issue


Last month, the Thomson Reuters Foundation brought some of Europe’s biggest financial firms together with law enforcement authorities in London, uniting their resources to combat modern day slavery. The financial institutions met with Europol and the UK’s National Crime Agency to identify the behaviors of potential people traffickers, to understand the dynamics of this global challenge and to ensure a greater understanding of how financial data might uncover the criminals.

The Thomson Reuters Foundation ran a similar project in the USA in 2012 with the office of Manhattan District Attorney Cyrus Vance Jr, which was credited with increasing significantly the reporting of suspicious transactions which might be linked to this cruel trade. The challenge is great, but the need to act is greater. More than 35 million people are effectively enslaved – trapped in forced and bonded labor, sexual exploitation, and other forms of servitude. Four in five of the victims identified in the EU are female.

The criminals involved use and generate significant amounts of cash – this fast-growing crime is estimated to be worth more than $150 billion worldwide – so clearly the money will emerge in the financial system at some point. The challenge for banks and law enforcement agencies alike is to identify such transactions and turn them into actionable intelligence which can lead to breaking the criminal networks.

It is astonishing that more than two centuries after the UK outlawed slavery that this practice can endure across the world. It is right, then, that we use the best in 21st century technology to track and ultimately unmask the beneficiaries of this vast criminal enterprise. At Thomson Reuters, we are working with clients and voluntary bodies to develop resources for companies which will help them to scrutinize their own supply chains and their sources of labour down to the subcontractor level.

The Thomson Reuters Foundation and the members of this new working group are to be commended for their contribution to stamping out this crime. Together they are marshaling considerable forces against those who seek to profit from slavery, and one that has no place in modern society.

Renminbi ascending: The global rise of China’s currency


A new report from Thomson Reuters, Standard Chartered, the Atlantic Council and the City of London explores how China’s currency impacts global markets, foreign policy and transatlantic financial regulation

Being curious people and deeply involved and enabling the intersection of currencies, commerce, regulation and development, we asked ourselves:  “What does the rise of the renminbi (RMB) really mean for financial markets and centers, regulatory development, investment inside and outside and foreign policy?”.

Others too were interested in this question and we partnered with Standard Chartered, the Atlantic Council, and the City of London to jointly research and understand these questions and gain greater insight, awareness and profile for our businesses globally

Six months later we are proud to share the final report, which was released on June 22. (more…)

How law firms are helping tomorrow’s businesses in emerging economies


Tomorrow’s entrepreneurs are finding leaner, more cost-effective platforms to raise their essential finance, and a fascinating report issued this week shows law firms around the world are offering their skills voluntarily to helping social enterprises develop sustainable and successful businesses.

Economic development and microfinance projects are supported by some 40 percent of law firms which contributed to the second TrustLaw Index of ProBono. TrustLaw is the Thomson Reuters Foundation’s global pro bono legal program, and its index charts the amount of work law firms across the world are providing on a free, voluntary basis to charities, non-profits, social enterprises and individuals.

The report analyzed data provided by 141 firms from 77 different countries, representing over 49,000 lawyers. It found that over the last 12 months, these lawyers donated 2.08 million hours of free legal support, on average investing about one week (43 hours) of their time assisting clients on a pro bono basis.

According to the report, the unprecedented rates of economic development across Asia and the Pacific have attracted international law firms to these rapidly emerging economies, bringing with them the culture of pro bono activity. (more…)

Despite the Deutsche Bank fine, an olive branch from the EU

European Commissioner for Financial Services, Jonathan Hill, speaks during a Thomson Reuters Newsmaker event

At last, there is a positive sign. After so many years of reputational damage, the financial services industry has been extended an olive branch by its regulatory masters – and it is one that should be grasped.

The most encouraging indication in many years that financial services has the opportunity to restore its reputation came last week from the summit of EU policymaking. In the midst of the UK’s election frenzy, which has seen the return of much negative comment about our industry, it was good to hear the European commissioner for financial stability issue a challenge for finance to take its rightful place as part of the solution to the EU’s economic troubles.

Lord Hill was speaking at a Thomson Reuters Newsmaker event, principally about Capital Markets Union.

Arguably no individual has greater influence over the future of the financial services industry. The Capital Markets Union he is tasked with establishing could perhaps rival the Single Market in revolutionising the fortunes of the EU’s member states, enabling Europe’s growth businesses to access funding across borders as never before. (more…)

The peak of regulatory change may be some way off


The amount of regulatory change tracked by Thomson Reuters for financial firms around the world has doubled in the last two years. The world’s financial regulators issued an average 155 alerts on every business day in 2014 – a total of 40,603 for the year. These alerts relate to updates to their rulebooks, but also other announcements, policy papers, speeches and enforcement notices. In 2013, they issued an average of 103 updates every business day; in 2012 the number was 68.

These numbers provide hard evidence of the extraordinary growth of the compliance culture in the financial services industry worldwide. The figures have been compiled by Thomson Reuters Regulatory Intelligence, which monitors more than 950 regulatory rulebooks worldwide published by more than 550 regulatory bodies.

The number of daily regulatory updates is perhaps as close as we can get to an authoritative measure of the extent of financial regulation growth since the crash. We have been compiling these figures since 2008, as the numbers and extent of rulebooks (and rulemaking bodies) have grown.

We also know that the consequences of failing to comply are becoming ever greater. In 2013, the UK regulator issued fines some 18 times greater than its predecessor had in 2008. Last year our report on the rising costs of non-compliance noted the increased focus among regulators on greater accountability and personal liability for the individuals involved in breaches.  We also noted that every global systemically important bank has been fined in recent years. The cost of compliance is not simply the amount handed over in fines, but also the cost of ending a business line, or perhaps curtailing the provision of certain services. And there is also the risk of enduring reputational damage done to the brand. (more…)