It’s not just who you know, but what you know about them

Government-issued passports have been around for a few centuries now and it’s almost impossible to envision a world without them.  Imagine having to fill in documentation and providing records that certify your identity and nationality for each country you visited. It would be pretty time consuming for the traveller and even worse for the countries being visited in terms of the number of employees needed to process and confirm the authenticity of the applications and associated documents.  Yet, this is exactly the state of affairs in the know your customer arena.

The concept of “know your customer” (or KYC) is as old as banking itself.  From modern banking’s beginnings in the 14th century Italy through to the hackneyed image of a stern manager reviewing a loan’s status with a client, the idea of knowing the person you borrowed from or lent to is something very familiar to us all. We are now, however, long past the days when the banker knew all of his or her clients directly or via a referral from a mutual party. The explosive growth and globalization of banking and the introduction of anti-money laundering and KYC regulations in the 1970’s certainly changed that business model.  More recently, high-profile million dollar penalties meted out to financial institutions have underlined that KYC requirements are not just the sole concern of small, over burdened compliance functions, but also an issue for the board room. (more…)

Executive perspectives: Role of news across our business

As the world’s leading news and information company, we not only reach more than a billion people worldwide with our Reuters News coverage, but we also generate and consume news across all of the professions that we serve. For more insight on the importance of news across our business, we talked to several of our leaders to gather their thoughts on how we provide our customers with the news they need, when they need it, regardless of what profession they are in. Here’s what David Craig, President of our Financial & Risk business, had to say:

“News is the oxygen of our business and the financial markets. The global financial community relies on news, every minute, every day. Reuters is the trusted, unbiased and authoritative source of news on companies, politics, macroeconomic changes, and events that inform discovery, insight, innovation and action. With 4 million news downloads a month on Eikon, where news is embedded within our customers’ workflows.

News is also at the heart of our mission and proposition, connecting customers to communities such as the Global Markets Forum, where journalists curate and lead discussions of the leading events of the day, 24 hours a day.

Whether exclusives and reporting on breaking stories, or analysis and data that enable critical business decisions, our award winning journalists across markets, sectors and geographies provide advantage in an industry where information and speed are paramount, and where separating the news from the noise and the signal from the static is our greatest strength.

News is a critical competitive advantage for us – and an essential one for the professionals we serve.”

Check out our other stories on news: (more…)

Unlocking innovation on the path to financial market regulatory reform – Download from Davos

World Economic Forum (WEF) in Davos

Five years on from the onset of the global financial crisis, it’s plain to see that regulatory reform efforts at the national and regional levels have diverged presenting an urgent need for a coherent and coordinated response from regulators. Given the risk that regulatory divergence poses, it’s no surprise that this key issue was high on the agenda at the World Economic Forum in Davos last week.  I joined one of the more interesting discussions on this topic in a working group meeting consisting of heads of banks, asset management firms, insurance companies, rating agencies and government representatives – all of whom ardently discussed the impact of regulation on innovation. (more…)

What’s next in disruptive technology and innovation in financial services – Download from Davos

Regulation and technological innovation are among the key subjects being hotly debated both on and off the official agenda at the 43rd annual World Economic Forum which kicked off in Davos this week. These topics were especially scrutinized during the WEF’s Disruptive Innovations in Financial Services working group meeting on Thursday. This group, of which I am a member, includes a small number of senior representatives from leading banks, insurers, wealth and asset management firms and financial organizations. (more…)

Despite a strong year, trust still lags for the financial sector

Reading the headlines this week as Goldman Sachs, JP Morgan Chase, Wells Fargo and Morgan Stanley topped market estimates, as Bank of America posted losses due to mortgage-related charges stemming from the financial crisis and Citigroup’s earnings jumped over last year but missed market estimates, I was struck by the extraordinary distance the financial sector traveled in 2013.

When we began monitoring the TRust Index metrics in Q1 2013, there was considerable uncertainty for global financial institutions and world markets. By year-end, with world equity markets close to six-year peaks, our Q4 TRust Index data showed a stronger industry had passed the five-year anniversary of 2008′s crisis. However, despite encouraging trends like tightening credit spreads and positive longer-term earnings forecasts, the Top 50 Global Financial institutions continued to score lagging trust in our news and social media sentiment analytics.

Sentiment (more…)

The danger of divergence – the need for global thinking in regulatory policymaking

The danger of divergence

The recent financial crisis, which started in the US in 2007 and reverberated around the world, demonstrated that cooperation on regulation and oversight of the global financial system has never been more important. Regulatory divergence is not only economically costly, but encourages regulatory arbitrage and undermines the ability for financial authorities to export regulatory approaches to the rest of the world. It can also introduce duplicative or inefficient practices for both providers and users of capital, thereby undermining global economic growth.

Clearly, regulation and its impact are at the top of the list of issues for members of the financial industry. This is why, together with the Atlantic Council and TheCityUK, we have released a 2nd version of our report, The Danger of Divergence: Transatlantic Financial Reform & the G20 Agenda. First published in 2010, the new 2013 report calls for more effective and closer cooperation between the transatlantic economies and the need for regulators to send consistent messages to market participants. This includes regulators in Asia and emerging financial centres, to build a coherent regulatory framework for the international financial system – not just the west.  (more…)

European Women in Sales Award caps a year of global recognition

Women in Sales logo

Throughout 2013 headlines have focused on the challenging conditions that have persisted across European markets and economies. Against this backdrop it is even more impressive to have had the opportunity last evening to celebrate the accomplishments of seven women colleagues as finalists at the European Women in Sales Awards, and to honour Zhanna Martyniuk, Direct Account Manager for us in Switzerland as the winner in Financial Sales.

Since joining Thomson Reuters in 2009, Zhanna has served in Austria and Switzerland. Now based in Geneva, she predominantly focuses on 139 clients in the Commodities and Energy Sector for Central Europe. In addition to demonstrating consistent outperformance against targets, she embodies ambition, professionalism, teamwork and is considered a role model in her team.

The Women in Sales Awards is designed to find the most exemplary women in sales across Europe and recognizes general sales ability, track record in achieving and exceeding targets and understanding of the implications of change on the wider business. Spanning many organisations (including global companies like Google, LinkedIn, Oracle, PepsiCo and GE) and eight industries, the fact that one-third of the finalists were Thomson Reuters sales professionals is a stunning endorsement of the breadth and depth of talent in our organisation.  Our other colleagues recognized as finalists were: (more…)

Way of the dragon: Supporting China’s currency on the world’s stage

REUTERS/Carlos Barria

It’s been three years since China became the world’s second largest economy, behind the United States. Despite having this economic powerhouse status, China’s currency is not yet in the equivalent ranks of the ‘majors’ or most actively traded currencies. But, perhaps we are getting closer. Some recent changes certainly point to this.

Just two months ago, the UK chancellor George Osborne and China Vice Premier Kai Ma signed a landmark agreement which will potentially create Europe’s first RMB offshore market in London, worth RMB 80 billion (or about US $13 billion). This is on top of the RMB 144.6 billion (US$ 23.7 billion) that China has already designated for foreign investment. I should note that other centres, including Paris and Frankfurt, are also vying to create such hubs in Europe as well. These would effectively create the first offshore RMB market(s) outside of Asia, following the creation of RMB offshore centres in Singapore and Hong Kong. The Financial Times recently cited estimates from HSBC that HK accounts for $12-13 billion each day, doubling the amount traded last year. (more…)

Don’t shoot the messenger

This article originally appeared on The TABB Forum

The financial industry has been buzzing with news that some financial institutions may ban the use of chat rooms and instant messaging, returning, instead, to voice communications. This follows observations that some of the biggest scandals that emerged from the financial industry in recent years were uncovered through reviews of online chat room histories.

But blaming the tool for the behaviour of those using it will not solve the issue. Chat rooms and instant messaging have become ingrained in how business is conducted across the financial landscape. The activity and behaviour, if not addressed from a cultural perspective, will go back to phone or in person conversations. It would certainly be much better to manage these interactions electronically, where there are audit trails and more controls can be put in place.

So far, the risks have been high for banks. Reports, such as this one from Reuters earlier this month, speculate that financial firms could well end up paying $125 billion globally to clear up misdeeds from the financial crisis. For an overburdened compliance team, the easy solution might be to simply shut things down, but there are ways for institutions to reduce the headaches whilst still meeting the communications needs of a 21st century workforce. (more…)

The winners in compliance

Compliance scandals involving money laundering, violations of Know Your Customer regulations and sanctions breaches are estimated to cost between two and five percent of the world’s gross domestic product, according to estimates by the International Monetary Fund. They also continue to contribute to the loss of trust in our industry, which is still negative according to our own Trust Index, that measures trust in global financial institutions using social media sentiment analysis.

Last night, we hosted our 9th Annual Compliance Awards in London, which brought together over 350 of the industry’s leading compliance professionals, regulators and professionals from related industries. Their accomplishments and contributions illustrate the high standards that compliance businesses and professionals should strive to achieve.

ComplianceThe volume and pace of regulatory change continues to show that firms need to be diligent, organised and pro-active in their approach to managing risk and compliance. In fact, through our Regulatory Risk solutions we currently track 110 regulatory updates each business day and figures from our Cost of Compliance survey earlier this year revealed that 81 percent of compliance professionals expected an increase in the volume of regulatory information this year with almost half expecting this increase to be significant.

As a result, firms are beginning to invest quite heavily in compliance.  Press reports, such as this one by Reuters, have cited banks ambitious investment plans related to compliance and we’ve seen high profile hires at a number of firms this year. New elite SWAT compliance teams are being created within firms, senior managers are now visibly and vocally demonstrating support for the compliance function and promoting a compliant culture, and compliance functions are being encouraged to build and maintain relationships with regulators as well as help their boards deliver an increasingly risk-focused agenda.