I’d like to write these few lines while preparing for my participation to the RegTech Day in Helsinki on June 1st. This year the topic and focus on the conference is about the threats and effort to be compliant with a growing number of regulations. Many different topics will be presented at RegTech and I’m eager to learn more from competent professionals within these areas.
As a keynote speaker at RegTech, the main points I will be bringing to Helsinki will be related to me being an ‘incurable optimist’. While working with our customers in the financial sector, I’ve always considered the regulations (mainly Basel regulations, since I’m a risk manager), more as an opportunity rather than a burden. During the time we live in today, it is fundamental to navigate the Bank with consciousness of the impact of the external macroeconomic situation.
While surfing through this dangerous sea, we should keep the risk regulation as the navigation chart to be followed and risk management techniques as the rudder to be steered, to navigate to a safe (and profitable) land.
With that said we must sit down and open our “rule book” to stick to these directions, and then several questions may arise: Will we have a capital shortfall when Basel IV is implemented? How will we need to adapt our IT systems? If we were planning to switch from standardized to model-based approaches, should we reconsider? Will we need to adjust our portfolio or raise additional capital?
To evaluate on and answer these questions, a couple of tool are publicly available: the BCBS Basel III Monitoring Report and the Basel III Monitoring Exercise by EBA. These tools can provide some direction of the general market trends in the European Banking system, like the fact that the output floor-impact will be significant and increasing over time up to 2030.
Nevertheless, all those impacts are very much depending on the portfolio mix and the type of business driven by the Bank. Many consulting firms have run very interesting use cases to exemplify this phenomenon, but we know very well that the result can vary significantly from case to case. This impact assessment requires even greater consideration if a Bank is considering obtaining IRB validation.
During the RegTech Day, I’m going to provide customer reference stories and a set of real experiences that we have had with our customers applying Basel IV, to make all those considerations more concrete.
These keys can help transform your customers’ experiences to take your level of service to the next level. With the data and technology available, there are no longer legitimate excuses for anything below excellence.
I am looking forward to an inspirational day at RegTech 2022.
Author Alessandra Villa is Business Solution Leader – Risk Management at SAS, RegTech Day 2022 event partner. She is a certified financial risk manager & will share her knowledge and insight to us on June 1st