Data is the currency uprooting legacy banking systems. See how a modern, end-to-end technology approach can help redesign processes and mitigate risks.
He is an award-winning writer, producer and host with over 20 years of experience delivering creative content to audiences around the world.
She is the business owner and strategic leader for Hitachi’s Financial Services RegTech business. A thought leader and pioneer in the financial services regtech sector, she is a global compliance, operations and risk expert across multiple financial services sectors, global regulations and jurisdictions.
This is the Studio NEXT podcast. I'm your host, Jeremy Brisiel. We have a great question to ask. What will the future of banking look like? We should be able to wrap that up in about 15 minutes. I mean, I know we can because we're talking to Nirvana. I mean that's pretty straightforward.
There you go. It's certainly not going to be Nirvana at the state it is right now.
You don't think …. The name and the landscape aren't the same at this point.
Do you call me and get to my answer phone? You will reach Nirvana, but I don't think banking is quite there yet.
Yeah I like, well that's a good, now we have goals. So, for those who don't know, could you tell us what it is you do and why we're speaking to you about this topic?
My background is financial services, 20 plus years in finance, and the dark side or as opposed to the light. Now that I'm in tech, although depending on the day, you know, I have days here … financial services with a risk compliance, regulatory hat on. I have given advice on regulations. I've helped draft some regulations. My role at Hitachi is regulatory technology. So, global head of that to work in terms of the development. And, really what that means is: Regulatory technology is to look at implementing compliance at the design phase of technologies. It's as simple as that.
That's pretty straightforward. I mean, very straightforward, and you say simple, but I think the theory is simple.
The theory is simple.
The execution, it takes a little bit of work.
Of course it does. Because you know what we have with financial services: You have an institution that has brick and mortar. They've got legacy systems, They've got legacy infrastructure. So with all of that happening and now you've got technology, technology is coming in. We're in the fourth industrial revolution. It's leading the way. It's absolutely taking over. And a lot of these regulations and these banks, you know, the regulations that were written at the time … things like tech weren't even a twinkle in someone's eye. Those regulations never kind of pre-empted for what's, what's coming right now. So, that's the kind of space.
That is amazing because at this point now, at least we're all in an awareness that we need to actually regulate and plan for things we can't possibly envision.
But at least we're in the right space: that it's digital, that it's technology as opposed to a horse and buggy and gold bricks.
Absolutely. And you know, what's really important is that, I mean, if you look at financial services and for example, financial services collapse, et cetera, and when we have regulation that comes out, oftentimes the mess has already happened. The proverbial has already hit the fan, right? So regulators have to come in, excuse me, and often they overreach themselves and they're fighting the wars of yesterday. And at the same time some clever so-and-so is cooking up a new thing that's going to come. You know, we haven't seen the end of the Bernie Madoff's, we haven't seen the end of, you know, disasters like Cambridge Analytica, et cetera. We will start seeing things manifest in a different way, but we haven't seen the end of those things.
So, if we can actually embed that when we're designing technologies and really look at the ethical implications and humane type of technologies and embed that in the development stage…. Nobody can tell the future as much as I like to think I can.
If anybody is tapped in. It is you.
We can at least put the parameters in place. You know, oftentimes regulators come out, it's like a fireman that runs into a house that has burned crisp to the ground and he's still got his hose running. They're still fighting those wars. So we can put those parameters in place from the get go. And once that is actually there, because you've got to remember, financial services is not just a regulation, although they have to be regulated, but their business is to generate revenue. So we need to also help them to be able to run their business and do what they need to do.
Yeah. That dual use really or dual persona to deal with in that place, which is we got to make sure it doesn't fall apart. Like that's what regulations are there for. We've got to make sure the next thing doesn't fall apart not the last thing. But, in the meantime, we also can't tighten everything so much that there's no room for innovation on the business side of that.
Absolutely. I mean, look, what's really important? So in my role, I work a lot with industry. And, I work a lot with key industry stakeholders because in order for us to kind of survive as traditional banking and financial services, especially with new entrants coming in, right? So Silicon Valley is coming for you guys and it's never been as real as it is, now. You've got the huge tech giants have moved in this pace or with their payments platforms, and they've got sleeker technology, they've got cutting edge technology and your traditional brick and mortar bank, they're still entrenched in the legacy systems. Not only that, but there's legacy thinking of leadership that gets in the way as well. So it's really important to be able to see that they need to put their money where their mouth is, invest more in an innovative projects, et cetera, and really try and see what they need to do together.
Where do you see that innovation come? Because even as you said, that's, I mean in the most casual anecdotal way, online high yield savings for the consumer is something that brick and border is behind. Like you can see startups in that phase every other day. So what in that, in those terms, what do you see as innovation, musts for some of the legacy?
Well, absolutely, you know, a lot of these so-called projects, et cetera, within these legacy organizations are called science projects.
Science Projects! Or, I see a lot of organizations buying start-ups dismantling them and actually taking the data scientists and trying to build it in house.
But, going back to something that I said earlier, you know, I do a lot of industry collaboration and for us to be able to survive this as an industry and a sector, it's important to have all key stakeholders within the ecosystem involved: So, from the regulators to the vendors to the buy side, the sell side, the exchanges … all of these moving parts of the ecosystem to really see how that can be impacted and how we can start innovating and really working together to put certain standards and measures in and then move forward from there.
And with that in mind, how is Hitachi positioned for that role?
Well, we've positioned very well in terms of, you know, at the end of the day, everything is based on data. Data is the new commodity. It's more precious than gold. And you know, I was in the oil and gas industry at one point in my long tenured career. I've been around a bit, but it's more data, metadata and data is our business. That's what we do. So getting that data in the right order, knowing a lot of the challenges with an industry. As you know, a lot of their data lives in silos and we've got these huge data lake projects that came about and big data projects and a lot of money being hemorrhaged into that. Data lakes have turned into data swamps. Nobody knows what to do with it. What is that data? There's still dark toxic data in organizations and those lakes that now become swamp-infested data that we don't know anything to do with. So in terms of Hitachi and our business, we're kind of taking that to the next level, looking at a more agile way, more like a more flowing data river kind of way. I call it a data river 'cause I just like coining new terms.
Well I think it's apt, and fluidity when we talk about flexibility and speed. A running river represents those pretty well.
Or delta. Whatever you want to call it.
It flows nicely.
It flows nicely. Yeah, that's true.
Yeah. So, you know, we're positioned because of the way we develop our products, embed those compliance parameters from the get go — like data governance, the cycle of the data. Because when you're in financial services, the regulators want to know, for example (and reporting or trading or what have you): What is the life cycle of that trade and at which point did it hand over and who took legal ownership, et cetera, et cetera? So same goes for data. Where did that data originate from? How did it come to be and where does it go? So we really embed those data governance processes within what we do with our clients as well. So we're very well-positioned.
That's a great position and really incredible strength of strategy, as well, in terms of all those things, I wanted to know, within your title is risk.
It's a big word that most people, I mean regtech as well, but risk: That one jumped out for this.
And compliance, regulation and regulatory effects.
Approaching the risk from that sort of multiple approach. Given all those personas, the attention they need, there is a risk in violating compliance and law, which we need to avoid. But [the risk is] also in having no success as a business. How have you navigated that risk? What do you prioritize for organizations as you go and help this out?
You know, for me, as I said at the beginning of it on the other side of the fence: I've been in financial services side and when a vendor came to me and I'd normally ask them three questions and if they didn't get it right they were out because they were trying to sell me something. The problem for me was they didn't understand my problem. Often, when our clients are screaming and shouting something, it's a symptom. It's not the cause. And they are complaining about a symptom. But what I like to do is to try and pinpoint what the cause is. It's like when you go to a dentist, I'll go to a dentist. I say, look, I've got a toothache. I think you need to pull that out. When the dentist looks at it, and says: Actually, I can fix that with a root canal. And that's, the cause is this. So knowing your client's business … I took a segue to get that thought. But it's important to know your client's business, how it impacts them and what their risks are and how you can help them mitigate their risks. So we really take pride in that, especially with recent announcements of merging with our consultancy arm, Hitachi Consulting Corporation (HCC). I think we are in a position not only to help with our clients with their strategy, but also to give them that end-to-end seamless offering that they need.
I would follow up with that to expand on that idea — that is something we've talked about here at NEXT 19 a few times — that bringing together of strategy and consulting and boxes and technology is one of those things that you can only deliver if it's done and it is now done. Do you see that as a big step forward in this space you work in?
I think it's a huge step forward and I think, you know, gone are the days that we were in silos and somebody who's an expert in this. Because again, back to the days when I had my nose to the grindstone, I had a million different service level agreements with different vendors. I didn't want to be dealing with that every year and I had to negotiate pricing again and I had to go through a procurement and do this and do that. If I had a vendor at the time that could deal with all of my issues. No, I'm not saying you're going to boil the ocean, but sometimes you need to take a much bigger holistic perspective. And I think, with what we're doing and the vision that we have in terms of the digital strategy we've got going forward, I think we're heading in the right way and really look at the outcomes our customers want, you know, and look to address that.
Well, I think that's a great way we're going to wrap things up there. But you touched on that such important way, which is to recognize symptom and cause difference, but always on the customer side.
Well, that's great. Thanks for sitting down with us and hanging out.
You are so welcome. Thank you for having me.
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