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Independent think-tank advises banks to engage with the regulators now

Independent think-tank advises banks to engage with the regulators now

JWG-IT identifies stumbling blocks to achieving G20 goals

London – 9 April 2009.  A week after the G20 summit, banks are still trying to come to terms with the implications of over 300 pages of considered plans and the aggressive targets that the G20 working groups have set themselves to reach by autumn 2009.  There is recognition that the G20 plan has teeth, having built in a self-policing mechanism where global regulators will evaluate the effectiveness of each of their implementations and prosecution records.

However, a discussion of what infrastructure changes will be required to do the job is notably absent and this should set alarm bells ringing across the banking industry.

PJ Di Giammarino, CEO, JWG-IT - the neutral FS think-tank, comments: “Anyone familiar with operations – from risk management to profitability measurement or customer relationship management - quickly appreciates the scale of the industry’s data issues.  Reliable and accessible information is at the heart of any operation in financial services, yet it doesn’t get a mention in the G20 papers.  This sort of practical omission, a common flaw in regulatory schemes, has been a traditional frustration for banks.

This is the most data-intensive industry on the face of the planet but nobody’s leading the data and infrastructure strategy required to support the numerous actions of the Washington Action Plan - at least publically.  The IMF/FSB do not have the resources to do the job and the banks must ensure that the agenda is not forgotten.

There’s no easy way for the regulators to achieve the ambitious data integration targets that have been set for them without the banks’ help.  As with any large technology project, a dollar spent in design will save 6 dollars to fix the problems once the system has been implemented.  However, neutrality is fundamental to getting it done right.  Most of the industry’s infrastructure is commercially motivated and the strategy, design and build out of new solutions require careful negotiation.”

There are some real barriers to getting this right:

  • The industry requires clarity on what data we are trying to collect, how we are controlling it and why
  • We need common target data model which can support decision making and provide regulators with the information they need
  • This will need a neutral party to create open standards with industry input - proprietary data assets foster complexity and restrict collaboration.

“It makes sense to put on the brakes and examine what will be required to run this new global regulatory infrastructure.  The G20 has essentially ripped the lid off a can of worms, handed it to the regulators and said ‘you own it’.  Whilst this gets brownie points with the general public, there is a real risk that the regulators will create even bigger problems.

Up to this point, the industry has failed to create common ways to enable better business at a regional, let alone global, level.  As a result, the financial services industry is now decades behind the real economy in establishing the building blocks of transparency and customer protection, for example, product and customer data standards.   

Under the G20 plan, the regulators have to shoulder a lot of responsibility.  There is a real danger that national frustrations and weaknesses in the cross-jurisdictional network could put a spanner in the works.  MiFID, in some ways, was a good foil for Lord Turner's question of whether we will have “more Europe, or less Europe”.  Its half-hearted implementation, and even weaker enforcement, demonstrates that, in finance, Europe did not have the will or the resources to do the job.

Banks are naturally feeling bruised right now, but this is not the time to crawl under a rock.  Rather than hide, those in the engine rooms need to proactively engage with the regulators and lay out what will be required to fix the infrastructure.”

About JWG-IT Group Limited

JWG-IT is the only financial services industry think-tank to facilitate collaborative work to resolve industry issues created by regulatory change.  Based on a working model started in 2005, JWG-IT has established strong relationships with EU administrators, leading firms and companies.  It is neither lobbyist nor consultancy and revenues are restricted to membership and event fees and content sales.  The JWG-IT Think-Tank is designed to help members and participants manage regulatory-driven change better, quicker, cheaper and with less risk.  JWG-IT launched the customer data management group and the liquidity risk action network in 2008.  For more information, see

For immediate release

PJ Di Giammarino,, +44 (0) 7811 430 503

Louisa Excell, +44 (0) 20 7608 2500

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