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Market Risk
Some of the world’s leading bankers are calling for more collaboration to benefit from fintech’s potential and better manage its risks.
Alternative sources of finance, such as marketplace lenders, have obvious financial inclusion benefits but many new models are shifting the risk to end consumers, who could incur in sizeable losses without fully understanding the products.
Alternative finance Electronic markets Data security With more financial processes going digital, the cybercrime risks are increasing it becomes increasingly important (and difficult) to ensure resilient systems are in place to safeguard information. Risks related to data-sharing are also becoming a growing concern. Poor conduct Payments problems Regulatory arbitrageMARKET OPPORTUNITIES
The appropriate use of trading algorithms and their impact on liquidity levels in global capital markets remains a hotly debated topic among regulators, but still needs to be closely watched, the report says.
While technology can help monitor employee activities and reduce conduct risk, it also has the potential to amplify the impact of illicit actions, says the paper, citing predatory algorithmic trading as an example. The need to remain competitive may also encourage firms to release tech-based products before they have been sufficiently tested or are fully compliant. There are additional risks stemming from the use of customer data.
Payments technology is a potential concern because failures in these systems could impact monetary policy and monetary transmission, according to the paper. It does, however, concede that regulators and governments around the world are working to improve the systems.
Regulation around financial innovations can be unclear, with rules tending to be based on a company’s legal designation rather than the services it actually offers. This means that certain providers may fall through the regulatory cracks
Data clarity
A call for a public debate to define what constitutes the acceptable use of personal data and the establishment of clear criteria on data ownership. It also calls for international policy makers and financial supervisors to encourage the adoption of shared standards and practices across jurisdictions.
A global forum
The industry would benefit from the establishment of a global forum to facilitate public-private sector debate on the technology-led transformation in financial services.
Better regulatory and supervisory standards
International regulators and financial supervisors should define what standards and capabilities national regulators need to better monitor and manage risks related to fintech. Standards should include the setting up of dedicated fintech teams, making rules clearer for companies, and ensuring greater international collaboration to reduce regulatory arbitrage.
Industry bodies
The private sector needs industry bodies that can help establish and enforce conduct standards in the light of changes brought about by fintech, the paper says. These bodies would set standards including disclosure requirements around personal data use and risks related to products, as well as help shape the regulatory agenda.
SOLUTIONS
Does your business make frequent payments? Are you getting exposed to recurrent risk due to market volatility?
Depending on your needs, there are 3 ways to benefit from a payments hub:
- Automation of all your FX transactions (spot, forward, orders) and payments (same and foreign currency).
- More accurate FX hedging execution.
- No more manual operations, meaning no mistakes and significant time saving.
Do you want to keep your company’s exposure always under control and have the chance to benefit from favourable market fluctuations?
- Is Dynamic Hedging the solution for your business?
Does your corporation need to handle numerous and frequent transactions in foreign currencies, possibly in several currency pairs, which are very complicated to hedge manually or using traditional FX providers like brokers or banks? Then this solution is particularly suited to your business
Does your company make many payments to suppliers in different currencies? Do you find it daunting to set up all payments manually?
- Payments file upload – If you have to process payments let’s say a couple of times a month.
- Automated file generation – Ideal when you process payments several times a week. Your system (e.g. ERP) automatically generates and sends the payments file (.xls, .csv)
- API – Perfect for heavy users. We connect your system (ERP, TMS…) to an API to make real-time payments without human intervention.
Payments can be channelled through;
ACH (Automated Clearing House), or SEPA – For slightly less urgent or smaller payments.
SWIFT – For large payments, which require tracking and speed.
PRICING API
- Update your pricing based on exchange rates movements thanks to a cutting edge API that adjusts your price-tag right along with the market.
- Prices are calculated once a day based on an exchange rate supplied from a third party. Throughout the day, the exchange rate may dramatically move with a direct impact on profit margin.
- Calculate your pricing according to market movements, protect your profit margins and make your product more competitive