Given the strong element of emerging markets in Asia, to what extent are you seeing a greater degree of due diligence in both the number of questionnaires and content, and to what extent can technology help both requestor and respondent in this area?
Due diligence is a hot topic at the moment and we have seen a large increase in the number of due diligence exercises being undertaken, generally. New, emerging or maturing markets often attract a greater degree of scrutiny. We have seen due diligence content become broader and deeper as the questions asked have become more comprehensive and penetrating than they might have been in the past.
Technology can help both requestor and respondent in many ways. Storage and instant, on-screen retrieval would be two immediate benefits, when both structuring and responding to web-based due diligence. Re-use of templates and rapid adaptation would be two more for the requestor. Automation and comparison (with past responses or peer group respondents) would be further areas to focus on for benefits for all participants.
From an operational point of view, standardisation and systematisation will help speed, accuracy and consistency. Generating quick, meaningful MIS on which to base decisions is the key output users would seek from technology in this area.
We have also seen a slightly ad hoc approach to satisfying the regulators in 2012, with the view sometimes being taken that just demonstrating ‘it is in hand’ is enough; this slightly patchy approach will need to be phased out over the next three years. Just as there are gaps in the position adopted by some Institutions, there are also many gaps in the solutions being offered in the market.
There are a number of stand-alone tools that can be used to satisfy the due diligence function, but our experience suggests that adoption of these solutions is often happening in isolation, with little thought given to the up- and downstream possibilities. Furthermore, the absence of existing functionality in which to store past records, the ease with which past due diligence can be linked to a current exercise for reasons of continuity is sometimes strictly limited; by perpetuating the conduct of due diligence exercises in environments that still do not permit continuity, this merely stores up the problem for the future.
Anticipating the value of running due diligence in a coherent ‘context’ that permits storage and retrieval, as well as adaptation and future re-use, has tremendous value.
During these relatively early stages of growth in the Asian markets, to what extent do participants see technology as a differentiator and, therefore, as a means of establishing a superior service offering?
Technology represents a fantastic opportunity to move away from manually intensive, slow and often error-strewn practices and procedures. Indeed, adopting a regional approach to a technology overhaul, as a way of piloting a new platform, is often the preferred approach. Lower cost and higher capacity are the key drivers, both of which allow a move away from low value administrative tasks into higher value added functions. It is this shift from data entry tasks, re-keying information, searching for documents and cobbling together reports that allows a re-focussing into higher value functions like relationship management, performance measurement, modelling and due diligence. Adoption of technology feeds the provision of a superior service to both internal and external clients and it is this superior service that feeds into reputation and ultimately acts as the differentiator.
To what extent is local regulation mirroring many of the changes in more mature markets and how well prepared are participants for greater levels of scrutiny?
The imposition of increased regulation on an international scale is undoubtedly impacting local markets around the world. The level of preparedness for greater scrutiny is far from clear when comparing market to market. But this is also true of both incoming enquiries as well as outgoing responses. More rigorous, consistent incoming enquiries will help underpin improvements in the quality and consistency of responses, overall transparency and eventually higher standards in all markets. If a respondent cannot come back with supportable evidence to back up their responses, it will simply not win the business.
There is a very clear need to try and move towards standardisation in a number of areas in markets which, historically, might not have lent themselves to standardisation. At least having clear standards, consistent procedures and measurable criteria with which to judge or assess local markets will help in overcoming the absence of established benchmarks. All of these topics lend themselves to technology, even at a very basic level. At its most basic, this involves low levels of automation, template driven documentation, clears sets of standards and procedures, improved, shorter communication lines, transparency and accountability, all of which underpin a robust business model.
In a newsletter, MYRIAD commented: “Forget the language of dashboards—it’s a fad.” Could you explain?
The dashboard has emerged as a panacea for all reporting ills, giving great comfort to senior management who might otherwise have no view whatsoever of the teams or business lines and operations reporting to them. What matters is not whether it’s a ‘dashboard’, a ‘window’, a ‘portal’ or a plain old reporting tool, rather the quality of the underlying data and how well it is organised and maintained.
Fundamentally, if you do not address your static data needs your dynamic data will be compromised; having given your dynamic data a home to go to, the coherence of that ‘context’ allows clean, consistent, repeatable reporting going forwards. We would always argue that it is the quality of the underlying data and how it is organised and re-presented that matters, not how pretty it looks. If you put diesel in a petrol engine, it doesn’t matter how good the car’s dashboard is; you still won’t be able to drive it.
How do you think risk management has changed for network managers since September 2008?
The answer differs widely from institution to institution. It is rare that network managers become outright risk managers, as the two functions are very different. What is absolutely clear is that network managers control or oversee a lot of information that can inform the risk management function.
We are often asked whether MYRIAD performs a risk management function and we—just as any vendor should—would reply “no, MYRIAD does not ‘do’ risk management, but MYRIAD does store core data that is central to the risk management function”. The reality is that risk management is done by human beings, based on reams of data that is organised in the best, most transparent fashion to inform their decisions. Network managers are, per se, relevant to the risk management function, but their value to it is their data input; their value increases exponentially when that data is comprehensive, clean, accurate and readily accessible at the push of a button.
What is the biggest challenge right now for data being internationally standardised?
There are a number of challenges to the standardisation of data, including:
Concerns about the motives behind regulation seeking the standardisation of data internationally;
The absence of trusted international standards authorities;
Disagreement over how best to proceed;
The absence of a unified drive towards standardisation by the buyers, ie, the people who pay; and
An element of foot-dragging by the providers, ie, the people who get paid.
Standardisation is something of a double-edged sword for technology: a clever technology platform does not need standardisation to prove its worth. Its functionality will be designed to overcome the absence of it, and these technologies are very high value.
But standardisation potentially erodes some of that value proposition, because competing technologies become more accessible as they are or can be less sophisticated, however, technology can help to define and refine the target platforms for standardisation by providing a clear roadmap for what needs to be done. In and of itself, this process of ‘target platform definition’ will help to define standards and underpin any exercise in standardisation across the industry.
The net benefit of technology is that standardisation can happen more quickly when informed and underpinned by robust technology solutions and technology then helps those standards persist through time.
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