deloitte ireland conduct risk, culture and reg-tech ... › content › dam › deloitte › ie ›...
TRANSCRIPT
Deloitte Ireland Conduct Risk, Culture and Reg-tech Breakfast Briefing 2018 26 June 2018
2
Agenda
Topic Presenter Timing
Introduction Sean Smith 8:00 a.m. – 8:10 a.m.
Keynote speech - Regulatory Expectations Colm Kincaid, CBI 8:10 a.m. – 8:35 a.m.
Session 2 Peter Engering 8:35 a.m. – 8:55 a.m.
Session 3 Nicola Vincent 8:55 a.m. – 9:15 a.m.
Session 4 Rose-Marie Kennedy 9:15 a.m. – 9:35 a.m.
Panel Discussion All 9:35 a.m. – 9:50 a.m.
Close
3
Keynote speech
Colm KincaidDirector of Securities and Markets Supervision at Central Bank of Ireland
4
Agenda
Topic Presenter Timing
Introduction Sean Smith 8:00 a.m. – 8:10 a.m.
Keynote speech - Regulatory Expectations Colm Kincaid, CBI 8:10 a.m. – 8:35 a.m.
Session 2 Peter Engering 8:35 a.m. – 8:55 a.m.
Session 3 Nicola Vincent 8:55 a.m. – 9:15 a.m.
Session 4 Rose-Marie Kennedy 9:15 a.m. – 9:35 a.m.
Panel Discussion All 9:35 a.m. – 9:50 a.m.
Close
5
Session 2
Peter EngeringSenior Manager, Deloitte Netherlands
6
Agenda
Topic Presenter Timing
Introduction Sean Smith 8:00 a.m. – 8:10 a.m.
Keynote speech - Regulatory Expectations Colm Kincaid, CBI 8:10 a.m. – 8:35 a.m.
Session 2 Peter Engering 8:35 a.m. – 8:55 a.m.
Session 3 Nicola Vincent 8:55 a.m. – 9:15 a.m.
Session 4 Rose-Marie Kennedy 9:15 a.m. – 9:35 a.m.
Panel Discussion All 9:35 a.m. – 9:50 a.m.
Close
7
Session 3
Nicola Vincent Director, Deloitte UK
8
Agenda
Topic Presenter Timing
Introduction Sean Smith 8:00 a.m. – 8:10 a.m.
Keynote speech - Regulatory Expectations Colm Kincaid, CBI 8:10 a.m. – 8:35 a.m.
Session 2 Peter Engering 8:35 a.m. – 8:55 a.m.
Session 3 Nicola Vincent 8:55 a.m. – 9:15 a.m.
Session 4 Rose-Marie Kennedy 9:15 a.m. – 9:35 a.m.
Panel Discussion All 9:35 a.m. – 9:50 a.m.
Close
9
Session 4
Rose-Marie KennedySenior Manager, Regulatory Risk, Deloitte Ireland
10
• Regulatory expectations – Consideration of the regulatory expectations in Ireland in respectof conduct risk and culture as it relates to conduct;
• Reflection on other jurisdictions – Reflecting on the learnings from other jurisdictionsincluding the UK and Netherlands to understand how the expectations of their RegulatoryAuthorities have been sufficiently addressed;
• Reg-tech – Reflecting on the impact and use of technology in the regulatory environment andthe different solutions that are emerging within financial services. Specific focus on the use oftechnology to assist and support financial services organisations in complying with theirregulatory obligations in respect of conduct risk;
• Practical steps – Sharing of insights into some of the practical steps organisations can taketo manage conduct risk and address the challenges in relation to culture.
Reflection on the key objectives for this event
11
Reflection on the impact and use of technology in the regulatory environment and the different solutions that are emerging within financial services.
12
Innovative disruptive technologies are creating a better case for change in credit, lending and Decisioning due to the ability to make achieve significant cost reductions and step-change in the customer experience
Robotics Process
Automation (RPA)
Advanced text analytics and
unstructured processing
Natural Language
Processing & Generation
(NLP & NLG)
Machine Learning
/ AI
Intelligent
‘Chatbots’
Intelligent
Assistance
Cap
ab
ilit
y
Robotics Process Automation
(RPA)
Machine Intelligence &
Reasoning
Machine Learning & Cognitive
Analytics
Time
“Mimics Action” “Mimics Thoughts”“Interacts and Thinks”
The Evolution of RegTech.
13
Impact on the Risk Operating Model
Disruptive technologies can be deployed across all of the key capabilities of a risk function
Operational
Services
Reference Data Sourcing
Account On-Boarding
Collateral Management
Other Op. Services
Portfolio Operations
Reporting
Modelling and Methodology
Model Management
Capital ModellingAnalytical
Services
Risk Analysis
Credit Risk Control
Assessment, Analysis, Approval
Underwriting Quality Assurance
Portfolio Management
Policy and
Control
Robotic process
automation
Artificial intelligence
Risk Sensing
Process
Re-engineering
Natural Language
Processing/
Generation
Intelligent
Automation
14
How does ‘RegTech’ help us now and what does the future hold?
Today - 2018 2019/20 Beyond
Cognitive & machine learning and advanced
analytics
The early exploration of ‘cognitive’ and ‘AI’ technologies interpret regulation.
Some initial automation of compliance processes.
‘Codifying’ control self-assessment and policy screening.
Advanced analytics and reporting starting to emerge.
Early integration of horizon scanning solutions
‘Codified knowledge’ - effective cognitive engines to digest and interpret regulation automatically.
Automated horizon scanning and ingestion / assessment of emerging regulation.
Automated links to risk appetite and control performance.
Enterprise-wide view of regulatory impact across the organisation.
Regulation managed through end-to-end RegTech platform, (beyond GRC…)
Emergence of data sharing.
Distributed and trusted network assessing regulatory compliance in real-time, identifying and alerting explicit, as well as implicit requirements.
Significant reduction in back-office monitoring and assessment of regulation.
Proactive alerting and impact assessment on change in regulations.
Integrated reporting between the enterprise and the regulator.
Predictive alerting highlighting impact of external events on the regulatory standing of the organisation, integration of ‘big-data’.
Industry utility for firms and the ability to data share.
Maturing solutions assessing
regulation and automating
compliance management.
Enterprise solutions managing and assessing
regulation. Push button, intelligent and
automated reporting
15
What is out there now, and how will ‘RegTech’ land into the business?
Source: http://bestthenews.com/article/100-regtech-startups-follow-fri-06172016-1424.html
Blockchain
AI/CognitiveRobotics
Advanced data management and analytics
RegTech
A view across the RegTech suppliers.
• Heavy focus on surveillance and analytics.
• Collaborations and partnerships emerging : Legal & Banking, Compliance and Technology.
• The growth in AI and cognitive offerings – training the technology is critical. Blockchain in its infancy.
• Next steps for GRC providers – a watching brief.
• Early stage development of industry utility approaches.
Defining a RegTech Roadmap
• Focus on the enterprise-wide view of how regulation impacts the business –joining the dots.
• Consider how you ‘codify’ the extensive knowledge that will already exist in your business.
• ‘Hearts and minds’. There is often a cultural journey to go on across the range of stakeholders.
• Partner with the right people.
• Engage the regulator. The earlier you can be work in parallel the better.
Our initial research estimates that there are c.160 established RegTech firms globally, providing technology based solutions to deliver regulatory projects and help businesses comply with current and future regulatory obligations.
Services include regulatory reporting, risk management, identity management & control, compliance and transaction monitoring.
16
How can technology be used to assistand support organisations in complyingwith their regulatory obligations inrespect of conduct risk?
17
WHAT IS BEAT?
Behaviour and Emotion Analytics Tool (BEAT) is Deloitte’s voice analytics platform that uses cognitive technology and risk algorithms to monitor and produce a risk score for voice interactions based on speech, behavioural and human emotional tendencies.
Why did we develop BEAT?
Increasing regulatory pressure and scrutiny on
customer interactions and outcomes
Current review processes are resource intensive and not
data driven
Reviewing interactions is time consuming (e.g. longer
than the call itself)
Identified an opportunity to develop a solution to
address these issues
Initial development was for retrospective assessment,
but has a much broader use
Have a detailed roadmap and currently being running a
number of PoCs across FS organisations
What can it do?
BEAT is a platform that uses cognitive
technology to analyse and monitor voice
interactions
It has three core functions:
1. Monitors all customer voice interactions
2. Identifies high risk interactions through
analysis of customer language and
behaviour
3. Maps interactions to outcomes and
provides details why
It has been developed to analyse over 30
different languages, and 30 different
behavioural indicators
Why is it different?
BEAT is proven in the market and we believe it is unique
because:
• It is the only platform that combines both language
and behaviour to assess risk
• It maps interactions to specific outcomes
• It utilises machine learning technology to constantly
evolve and enhance the algorithms that analyse the
interactions – the greater the volume the more
accurate the risk assessment will be
• It can be tailored to meet your specific risk
requirements and user needs
18
HOW DOES BEAT WORK?
BEAT ingests audio data in a variety of formats, and performs a number of analytical processes to produce three outputs which can then be assessed by a user to determine the appropriate next action.
Audio data
Meta data
Phonetic algorithm
- Phonemes
- Phonetic searching
BEAT Language
- Transcription based
- Fuzzy searching
Search Packs
- Significant
- OMO
- Enhanced
BEAT Behaviours
- Vulnerability
- Undermining
- Call Dominance
- No Talk
- Cross Talk
- Hesitation
LANGUAGE ANALYSIS BEHAVIOURIAL ANALYSIS
BEAT Outcomes
- Anger
- Sadness
- Happy
- Neutral
….
Transcription
Risk Score
Outcome Alert
Machine Learning
Customer Segmentation
INPUTS BEAT PLATFORM OUTUTS
19
BEAT provides multiple benefits over traditional approaches, and has been designed to support multiple use-cases within an operational call centre environment
HOW CAN BEAT HELP YOUR BUSINESS?
1. Increased coverage of call monitoring
2. Reduced manual effort and cost, enabling resources to focus on
high risk interactions
3. Improved customer service and outcomes through pro-active
identification of high risk calls and detailed visibility over
interactions
4. Increased processing efficiency
5. Enhanced risk identification
6. Can be deployed with minimal integration to existing architecture
enabling rapid benefit realisation
1
2
3
4
5
6
BEAT
PLATFORM
CALL
CENTRE
USE-CASES
COLLECTIONS CALLS
ADVICE CALLS
COMPLAINT CALLS
NON-ADVICE CALLS
PRESSURE CALLS
20
Summary of the insights into some ofthe practical steps that can be taken tomanage conduct risk and address thechallenges in relation to culture.
21
Central Bank Expectations of Boards & INED’s
Consumer
Culture
Confidence
Compliance
Challenge
The board taking responsibility for the culture of the firm and understanding the behaviours that culture drives – for example through the establishment of an ethics subcommittee to the Board; or a measurement or monitoring by the board of the firm’s culture through engagement with management, employee surveys or employee focus groups.
Driving consistent communication of the desired culture from the Board, recognising the importance of ‘tone from the top’, to all staff levels of an institution.
Deputy Governor Ed Sibley
At the Central Bank of Ireland we think of culture as the assumptions, values, expectations and beliefs, which drive the behaviours of staff.
The question of how firms can effect real cultural change for the better is not one to which there are always simple answers, though much of the current thinking focuses on the importance of a firm’s purpose, leadership and governance in influencing the culture.
We will engage with the firms’ boards and senior management to ensure there is a clear focus from the top on embedding and measuring firms’ own cultural change programmes.
Director General, Financial Conduct Derville Rowland
From both an INED’s as well as the Central Bank’s perspective, joining a board as an INED is a serious commitment and carries considerable responsibility. The INED must act in the best interests of the Company as a whole, not only for shareholders but considering all stakeholders.
One of the most important attributes of an independent board member is their ability to bring fresh, unencumbered and independent perspective to ensure that the interests of the firm as well as consumers are protected. The importance of a truly independent thought process cannot be overstated.
Sylvia Cronin, Director of Insurance Supervision
It is important to stress that the culture of a firm is the responsibility of that firm.
Culture and attitudes can be changed for the better when strong leadership is provided.
Director General, Financial Conduct Derville Rowland
Effective’ culture is still rooted in old fashioned values of ‘doing the right thing’ and creating an environment where people can speak up and are comfortable in expressing their views. A truly independent non-executive director helps foster a good culture within a firm and can help challenge aspects of culture which may not be best practice. INEDs, therefore, can be a positive influence, shaping the values, behaviours and standards the firm aspire to achieve.
Sylvia Cronin, Director of Insurance Supervision
22
Culture
Culture in financial services firmsKey areas of focus for the CBI
The “tone from the top”The role of the leadership in setting, communicating and challenging the firm’s culture
Purpose and strategyA clear sense of purpose and alignment between strategy, culture and values.
Individual accountabilityEnhanced individual accountability for specific roles and responsibilities
Remuneration and incentivesRemuneration and incentives that promote good outcomes for the firm, customers and the market
Governance and controlsA culture that reinforces good
governance and controls
Mindsets and behaviourMindsets and behaviours that reflect the
firm’s target culture and values
CultureCulture
23
A change of culture
Embedding a more Customer-Centric Culture – What is needed?
Make it personal
• Metrics linked to objectives,
performance ratings, pay and incentives
• Celebrate success stories
• Identify conduct champions within the 1st line
• Hold regular training and communication events
• Assurance reviews
Conduct risk appetite
• A clear statement of
conduct risk appetite with supporting policies and procedures will help
employees understand acceptable behaviours.
Lead from the top
• Senior management and
executives need to demonstrate the values through their decision
making
Responsibility & Accountability
• Clear responsibilities and
ultimate accountability throughout the organisation
24
What next? Practical considerations
Establishment of a Management
Information (“MI”) Dashboard for the
Board & Risk Committee, reflecting
on the quality, relevance and
frequency of receipt.
Articulate very clearly the culture of the organisation
Clear communication of
the roles, responsibilities and
ultimate accountabilities/ ownership for
culture
Request a culture Health-check to identify potential
vulnerabilities and areas of concern
Consider the use of external
benchmarking and independent
challenge
Consideration of the optimum governance
required to support and provide
oversight for the organisation’s
culture
Reflect on the reward structures in place to support
the cultural objectives of the organisation and how these are
incorporated into Performance Management
25© 2017 Deloitte. All rights reserved
“Compliance is not simply about ticking a box, it is ensuring regulated firms are doing the right thing in the right way, and considering the spirit as well as the letter of the requirements”.
Ed Sibley, Director of Credit Institutions SupervisionAddress to the Association of Compliance Officers of Ireland – 14 March 2017
26
Agenda
Topic Presenter Timing
Introduction Sean Smith 8:00 a.m. – 8:10 a.m.
Keynote speech - Regulatory Expectations Colm Kincaid, CBI 8:10 a.m. – 8:35 a.m.
Session 2 Peter Engering 8:35 a.m. – 8:55 a.m.
Session 3 Nicola Vincent 8:55 a.m. – 9:15 a.m.
Session 4 Rose-Marie Kennedy 9:15 a.m. – 9:35 a.m.
Panel Discussion All 9:35 a.m. – 9:50 a.m.
Close
27
Feel free to contact us
Sean SmithPartner, Regulatory Risk, Risk Advisory - Ireland
Email: [email protected]
Phone: +353 (0) 1 417 2306
Rose-Marie KennedySenior Manager, Regulatory Risk, Risk Advisory - Ireland
Email: [email protected]
Phone: +353 (0)1 417 8933
28© 2017 Deloitte. All rights reserved
Any Questions
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.nl/about to learn more about our global network of member firms.
Deloitte provides audit, consulting, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500® companies through a globally connected network of member firms in more than 150 countries and territories bringing world-class capabilities, insights, and high-quality service toaddress clients’ most complex business challenges. To learn more about how Deloitte’s approximately 245,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn, or Twitter.
This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person whorelies on this communication.
© 2018 Deloitte The Netherlands