Today, it’s GDPR, MiFID II and PSD2. Tomorrow, it could be Basel IV and the Brexit aftermath. Regulatory issues are going to be high on the industry’s agenda for years to come. According to the Financial Times, financial services companies are already spending up to 10 per cent of their revenues on compliance functions – and that bill could potentially double in the next five years.
At Avaloq, we use technology to master compliance and turn it into an opportunity and a source of competitive advantage for the banks we work with. Over the last few years we have developed a range of community solutions that enable our clients to achieve compliance promptly, easily and cost efficiently.
To remain ahead of the curve and cope with the torrent of regulatory changes, our Banking Environment Change Monitoring competence centre (BECM) works hand in hand with global consultancies like PwC and KPMG and with our clients and partners to monitor upcoming regulations and devise practical, economical solutions. Every quarter, we share full details of new regulations and our planned solutions with the Avaloq community through our BECM newsletter.
In early 2018, we completed delivery of the full set of solutions for MiFID II’s investor protection requirements, with appropriateness and eligibility checks, standard adapters for PRIIPs, transactional reporting and post-trade transparency reporting and cost and fee simulation for ex-ante reporting. In 2019, we are planning to develop a standard adapter to feed business rules from third party providers into Avaloq's business rule engine. Also in 2019, FIDLEG, the Swiss Financial Services Act, will come into force, ensuring a level playing field and fair competitive conditions for all financial intermediaries. Because FIDLEG is similar to MiFID II in its scope and requirements, particularly around transparency, Avaloq is working to create a community solution based on the solutions developed for MiFID II.
In relation to PSD2, Avaloq has already implemented its first PSD2 XS2A (access to account) API, based on the UK Open Banking Read/Write API specifications. At the end of 2018, we plan to deliver a kernel implementation of PSD2 XS2A APIs in line with the NextGenPSD2 specifications of the Berlin Group and STET (France).
Avaloq is also a member of the Swiss Open Finance API (SOFA) working group, formed to create a common API for the Swiss finance industry. We are actively working with the group to define an interface description for a common API standard.
The other major EU Directive that became operational this year is GDPR (the General Data Protection Regulation). As the EU itself interprets this, on its GDPR website, the aim of the new rules is to give all EU citizens new protection from privacy and data breaches in an increasingly data-driven world. The changes required by GDPR can be addressed in Avaloq via extensions to the object model and reporting capabilities and we have already made the necessary adaptations for our SaaS clients.
Apart from these, we see no major international regulations that will have a significant impact on our clients in the immediate future. We are continuing, however, to monitor the regulatory landscape in all our main markets and provide a full list of all the regulatory solutions we have delivered or will be delivering for members of our community.