Via discussions hosted on the Capco Institute Blog, members debate high profile issues, with frequent and provocative contributions from Capco thought leaders. For institutions around the world, how will the changing financial services landscape form the future of finance?
Author Tobias Voigt Published October 06, 2015
The Basel Committee on Banking Supervision has been revising its market risk framework since 2012. The result of its ‘fundamental review of the trading book’ (FRTB , BCBS 219) is expected to be implemented by January 2018, with 2016-17 scheduled for calibration and testing. The consultation phase for the new regulatory framework is still ongoing and has featured several Quantitative Impact Studies, highlighting the framework’s complexity.
Authors Tommy Marshall , Christian Wuerth , Katie Hermann Published October 01, 2015
In the last part of our series “Our EMV Future” we mentioned a liability shift set to occur in October of this year. So what’s the liability and where is it shifting? Liability in this context refers to which party is liable for fraudulent charges on a credit card. If you are one of the 41% of American cardholders1 who have been a victim of fraud, you most likely did not have to bear the cost of those charges. So who did? Currently the card issuers (i.e. banks) are liable for the cost of card present fraudulent charges (including both counterfeit and lost/stolen cards) – and its costing banks an estimated $10 billion per year2! However, come October the rules are changing and this presents the issuers an opportunity to recover some of these costs… but timing is critical.
Author Isabel Naidoo Published September 29, 2015
Millennials are not looking for life-long careers. Future workplace will use technology to match skills, opportunities and values to fulfil shorter-term projects. Employee partnerships, similar to the fledgling examples of alumni and LinkedIn networks, will see employees cycling in and out of firms to work on their terms.
Author Jennifer Liu Published September 23, 2015
You could hear an audible sigh of relief across the whole of Wall St. when on July 21st , 2015, the Volcker Rule compliance date came and finally (after years of preparation) went, leaving the world of trading permanently and irrevocably, changed. With its main goal to restrict proprietary trading, The Volcker Rule(s) not only touches essentially all trading desks across Capital Markets, but also all business lines throughout a bank that in any way impact trading. Volcker was one very big rule, and one most certainly the venerable Mr V. refined in his mind, many times throughout his illustrious career in finance; however, there was still a lot left unclarified for affected banks. Will the measures banks managed to put in place to comply with Volcker’s day in the sun, stand the winds of time? With whispers of manual, patchwork processes and even, spreadsheets! – Wall Street professionals are realizing that perhaps the battle has been won, but the war has only just begun.
Author Dan Jones Published September 22, 2015
In the last of our four-part series on putting the consumer at the heart of consumer banking, Dan Jones takes a different perspective. So far, the focus has been on ways existing banks can adapt to survive and thrive in the new consumer banking landscape. Now, Dan looks at a new category of player: the ‘non-traditional’ competitor. Read Part I, Part II and Part III.
Author Dan Jones Published September 15, 2015
In the third of our four-part blog series on putting the consumer at the heart of consumer banking, we consider another key line of defence against emerging competitor threats. Read Part I and Part II.
Author Dan Jones Published September 10, 2015
In this second blog in our series (read Part I) on putting the consumer back at the heart of consumer banking, we look at the first of the three key lines of defence against fundamental changes in the banking landscape: imitation. Imitation is a strategy well proven in nature. When a more successful predator appears, you can either continue to do what you do and hope that the rival will fail and go away. Or you can learn from their techniques, emulate the best of them, and change your own game.
Author Andrew Arwas Published September 07, 2015
How can established financial services brands win the ‘Robot Wars’ being waged for the hearts and minds (and wallets) of a generation of investors? (While ensuring the robots always prioritise the best interests of their human customers?)
Author Dan Jones Published September 03, 2015
In a new four-part blog series, Dan Jones looks at some of the key issues associated with creating a new kind of consumer banking product range and service style. A fresh approach can and must directly reflect the aspirations of consumers themselves. In part I, Dan examines the fundamental forces that are reshaping the consumer banking landscape.
Author Bernd Richter Published September 01, 2015
Wanted – New ways for banks to embrace successful digital innovation without ignoring old problems.
We keep hearing that banks must do more to bridge the ‘digital gap’. But, in order to create and deliver the next generation of digital customer service experiences, they require a more predictably productive development environment.
Published August 26, 2015
This is the second part of a blog by Philip Booth - Professor of Insurance and Risk Management, Cass Business School - based on his presentation to the Cass Capco Conference: Risk Rebooted in June 2015.
Read Part I
Published August 25, 2015
This is the first part of a blog by Philip Booth - Professor of Insurance and Risk Management, Cass Business School - based on his presentation to the Cass Capco Conference: Risk Rebooted in June 2015.
Author Bethel Desmond Published August 11, 2015
Trust (as in safety, security, fairness, transparency and reliability) is the key driver that separates highly satisfied consumers from less satisfied ones, and that’s a fact. A fact proven by FIS’s Consumer Pace Index, which showed that regardless of age or nationality, banked consumers expect their banking providers to get basic trust factors right. These trust factors (aka “satisfiers”) form the foundation of banking relationships, and without them financial service providers will not get high scores when it comes to customer satisfaction. Without trust, customers are less inclined to recommend their bank and the likelihood of making their next service or product purchase from their bank plummets to zero. Let’s face it, banks have to solidify customer trust before they can aspire to cement, or grow, future financial services relationships. What’s a bank to do?
Author Bethel Desmond Published August 04, 2015
On Tuesday, August 4th 2015, Symbiont will launch the first ‘SMART SECURITIES™’ issuance from Capco’s Innovation Lab, a cutting edge, financial services consultancy in downtown Manhattan. What does it mean and why should we care? Symbiont, an interesting blockchain start-up, claims to be ‘bridging the gap between the emerging blockchain ecosystem and Wall Street’1. This will be achieved by issuing its founder stock, convertible preferred stock and convertible notes on Bitcoin’s increasingly popular distributed ledger known as The Bitcoin Blockchain.
Published July 29, 2015
We know challenger banks have the potential to be powerful disruptors, compared with their more traditional competitors. But are any of them likely to become a real force on the UK high street any time soon? Sure, challengers boast speed, connectivity and convenience that traditional banks lack. But the lack of trust, which is now synonymous with the banking industry, affects new-comers just as much as the older hands – or so it seems
Yes, established banks have a long way to go to regain our confidence in the post-crisis world, still full of regular misconduct, mis-selling and manipulation headlines. But at the same time, how many of us would trust a small, new institution we’ve not heard about to be a custodian of our assets? Well actually, more and more it would seem.
Let’s look at some facts. In recent years, we have seen new names enter the British banking market. Brands such as Metro Bank and Aldermore are just a couple that spring to mind, with some 26 banks in discussion with the Financial Conduct Authority in the pursuit of banking licences. Let’s also not forget brands such as Tesco and Sainsbury’s - both have successfully managed to leverage their brand and existing customer base to sell financial products that are tailored to their customers’ needs. A couple of salient examples that challengers need not come solely from the financial services industry!
Authors Matthew Berkowitz, Ashwin Gadre Published July 28, 2015
When the government of the United States starts asking questions about conflicts of interest in the nation’s $7.5 trillion retirement investment market, it’s not something you ignore. In a recent study commissioned by the White House, findings show that consumers could stand to lose over $17 billion due to ‘conflicted advice’. Or to look at it with human eyes, if a retiree receives conflicted advice when rolling over a 401(k) to an IRA at retirement, he or she will lose an estimated 12% of overall savings over 30 years1. Now that’s not right, and President Obama as well as the Department of Labor (DOL), vowed “to protect investors and also level the playing field for hard working and honest financial advisors2”. But what will new oversights and regulation mean for the wealth management industry? What amount of investment will wealth management businesses need to make to stay in the retirement advisory game?
Author Matthew Berkowitz Published July 24, 2015
It is no secret that since the credit crisis of 2008, a trust deficit continues to persist in the financial services industry. Recent studies have shown that consumers view financial services as the least trusted industry, with only 46% of the population having any trust at all1. Consumers’ confidence in financial institutions has plunged, nowhere more so than in wealth management. There, concerns are rising about unethical business practices and advisors placing profits ahead of clients.
At the same time, finance and financial decision-making is increasingly critical especially in today’s environment where the onus of saving and preparing for retirement is largely left to the individual saver. This is due to an evolution within the retirement world, a shift from traditional pensions that provide guaranteed payment for life, to defined contribution plans and Individual Retirement Accounts (IRAs). For financial services institutions and consumers both, rebuilding trust to help clients would be the best road forward. Could the Department of Labor (DOL), with its new ideas and guidelines for wealth managers, help usher in these much-needed, new relationships?
Published July 22, 2015
The rapid growth of sophisticated telco networks in Africa is one of the great communications success stories of our time. In many cases, countries and their populations go rapidly from a near ‘no-phone’ market to very sophisticated 4G networks.
Financial services firms operating there will need to achieve the same ‘leapfrog’ effect, building on the unstoppable growth in the mobile phone usage. But at the same time they can help accelerate the spread of so-called 4th generation banking and help achieve, financial inclusion, one of the world’s greatest economic challenges.
Author Rolf Enders Published July 17, 2015
Radical cost-cutting, branch-closing and job-axing are no longer enough. In the era of digitalization, low interest margins, strict regulations and brave new-entrant banks will need to find a new approach to regain profitability.
Most banks fail to earn their cost of capital. In Germany, for example, only 6% of banks earn their equity costs. Additionally, it is estimated that 40% of the costs incurred in banks are due to wasteful activities that add no value to the end consumer.