Banking Regulatory Challenges & Fintech: Bonova Advisory Reports Views of Global Bank Leaders at a Leadership Summit in Silicon Valley

​​​​​​​September 14 - 15, 2016 : ‘Banking Disrupted Leadership Summit’, was held at Silicon Valley Center where Global Banking Industry leaders were in attendance to meet face-to-face with leading innovators and disruptors in Silicon Valley, the focus was inevitably on the new gush of Fintech.

Fintech space is continuing to thrive, but at the same time, is also said to be a ‘solution looking for a problem’ – predominantly due to the potential disparity in innovation vs. regulation. The key is in finding that lean gap of balance in synergy between the new wave of Fintech, the banks, and the regulatory compliance requirements.

A few issues cited by some of the Global Banking Leaders, are summarized below:

Benedict ANYALENKEYA NIGERIA

Head of eBusiness | Unity Bank Plc, Nigeria

In our conversation with Benedict Anyalenkeya, Head of eBusiness at Unity Bank (one of the largest employers of labor-force and GDP contributors in Nigeria), we gathered that the bank’s major challenge is customer positioning, and that it has a lot to do with bank’s adaptability to the modernization and generational shift.

“The customers are sophisticated, mobile responsive, and social media active. (They) are demanding more from the banks (to suit such lifestyle), but banks don’t have that level of infrastructure to meet the expectations.”

While Mr. Anyalenkeya expresses that Unity Bank is looking to on board a Fintech firm to help with the technology enablement, and to be more in tune with the Nigerian youth population, he also voiced the Cost of Compliance, and Banking Fraud to be two other serious challenges that the bank faces today.

He says, “Regulations are very tight for Nigerian banks. Regulators are very forward looking, and many new directives are released by the central bank every other month. This makes compliance  very expensive. There is heavy fraud involved in the region, and hence a thorough and robust identity verification is crucial”.

Daniel PORTER   ILLINOIS

COO | Capital One Bank, US Card Partnerships

Daniel Porter, COO of Capital One Bank (US Card Partnerships), voiced the legacy mainframe systems to be the biggest challenge faced by the bank today.

Other biggest challenge, in his words, is “the fear of the intent of law and how to give customers what they want”. He mentioned AML/KYC( Anti money laundering/Know your customer) real-time processing as a prime example of this.

Within the card business, while AML can be significantly improvised by partnering with Point-of-sale apps and the retail businesses, the exceptions to the process slows it down. Customers do not want to be waiting while time-consuming Due-Diligence procedures are carried out, which ultimately drops the new customers’ sign-up rates.

Daniel Porter also expressed difficulty in finding Regulations Vs. Innovation symmetry to be one of the imminent challenges faced by the business. When dealing with complex regulatory guidelines, it is laborious to be innovative and progressive enough.

B.Doyle MITCHELL, Jr.  WASHINGTON DC

CEO | Industrial Bank, Washington, DC

CEO of Industrial Bank, the largest minority owned bank in Washington DC, B. Doyle Mitchell, Jr, echoes the same Regulation Vs. Innovation predicament as the one mentioned by Capital One.

Innovative Fintech products are out to solve problems, however, a thorough vetting on regulatory compliance is critical before any adoption.

Although a lot of Fintech firms are disrupting Banking, and aiming to enhance banking processes, B. Doyle Mitchell, Jr  believes that “Banks still have to move forward with caution in being able to conduct a thorough risk assessment of the new technology and products that are offered by the innovative Fintech firms”.

Hamilton ANDRADE BRAZIL

CFO and CRO Banco do Daycoval

Hamilton Andrade who serves at Banco do Daycoval as a CFO and a CRO, suggests the biggest challenge faced by the business today, is finding the compliance and governance equilibrium between the two entities.

Case in point: The recent merger.

CIT Group sold part of its Brazilian operations business to a local Brazilian bank Banco de Daycoval. Mr. Andrade expresses that their biggest challenge today is that the local Brazilian bank “operates in a traditional environment, with little/no Governance setup, inadequate compliance to regulations, and fractured processes”.

Reflecting on the recent merger, the CRO also voiced about the difficulties in managing the balance between the original CIT Group (heavily governed) and the new local Brazilian entity (lack of governance), and the lack of appropriate historical data retained by this local entity.

Gustavo Cappi BRAZIL

Superintendent at Itau | Unibanco Brasil

Representing Unibanco Brasil was its Superintendent Mr. Gustavo Cappi, and he articulates that the primary challenge for Mr. Cappi comes from managing the liaison between the business, and its IT arena.

“They supervise the systems and data enterprise-wide, and (therefore) face challenges where there are silos in business and technology. It is becoming very hard to eradicate those to engage them in centralized communications and strategy.”

Contact: Breana Patel                                                   
E:  Breana@bonova.net
C: 732 788 6633