The second instalment of Standard Chartered’s Regulatory Readiness Series for Corporates explores the impact on treasury of the regulatory necessity to respond to immediate threat while delivering on long-term planning needs.
Rome was not built in a day. As with every embryonic settlement, the immediate concerns of protection and security were tackled first; only then came the longer-term thinking that would deliver on the more sophisticated and refined needs of its growing citizenship and eventually, empire.
But what has this got to do with regulation? In a sense, the founding of Rome mirrors the creation of today’s vast and complex financial rulebook: it’s essential to attend to the fundamental needs first; tackling the refinements must be planned but must also come later.
Michael Spiegel, Global Head of Transaction Banking, Standard Chartered, comments that “the massive growth we have seen in e-commerce and new payment opportunities are facets of the broader shift towards digitisation”.
As the digital empire expands, speed is always of the essence – but not at the cost of proper controls. The second edition of Standard Chartered’s Regulatory Readiness Series for Corporates takes as its theme ‘the building of resilience in a digital world’.
Like the building of ancient Rome before it, the fundamental needs of digital stakeholders have to be met first, with providers in both cases offering essential security and protection. But for either to have become structures upon which every other aspect of society may be built and flourish, early watchfulness and responsiveness must sooner or later be balanced with long-term planning if the evolving needs of all are to be catered for.
In regulatory terms, one of the key decisions of the past decade was driven by the almost existential catastrophe felt in the aftermath of the 2008 financial crisis. Basel III was established in its wake to strengthen regulation, supervision and risk management in the banking sector, and provide greater assurance and confidence to corporate and institutional clients. It was an immediate response.
With progressive improvements in the intervening years having maintained banking sector efficacy during the pandemic, Basel IV is now being finalised. It will take effect in January 2023 and should give the world renewed confidence that the financial markets – and everything they support – are indeed built upon strong foundations. Basel IV: Standardising Risk and Capital Calculations highlights some of the most important elements for treasurers to consider.
With e-commerce gripping consumers and businesses alike, this edition of Regulatory Readiness continues with an exploration of some of the fundamental changes in attitude towards risk, responsibility and opportunity, and the ensuing regulatory response, that this has generated.
Opening Access to Banking Data and Payments delves into the emergence of fintechs and how they are blurring lines of distinction between services offered by traditional banks, and those of non-bank players. It asks how regulators are using Open Banking rules to stimulate increased competition and innovation in banking services, and then considers the groundwork being laid for unprecedented levels of corporate connectivity and data exchange with financial services partners.
Of course, with the broader shift towards digitisation – and the acceleration of this trend since the onset of the pandemic-enforced remote-working practices – opportunity has knocked persistently for some elements of society.
Rising to New Cyber Security Challenges contemplates how new working practices, business models and human anxieties are being exploited by cybercriminals. But it also discovers how regulators are helping organisations of all sizes to protect their assets and data, staff and clients.
The European Commission’s proposed Digital Operational Resilience Act (DORA) introduces new rules for financial entities but also expands the regulatory reach to technology service providers. The Bank of England’s proactive CBEST framework is a voluntary test of bank defences using advanced threat intelligence and realistic attack simulations. Along similar lines is the European Central Bank’s Threat Intelligence-Based Ethical Red Teaming (TIBER-EU).
TIBER-EU may be the most apt acronym to sustain a Roman empire analogy, but the aim of all of these initiatives is very much about building resilience in a digital world so that all inhabitants may thrive as well as survive. Of course, the fall of the Western Roman Empire acts as a salutary lesson as to why maintaining and implementing an appropriate rulebook is so vital to prolonged success.