The EU's General Data Protection Regulation is requiring banks to revisit some technology decisions, especially around the use of automation and artificial intelligence. "Companies developing AI technologies will have to consider and embed the data protection issues into the design process," says David Martin, senior legal officer at consumer advocate BEUC.
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Banks that have been split over how to standardize bond repackaging, pitting the shared special-purpose vehicle model against a separate special-purpose vehicle model, may be finding common ground. "Repack markets as a whole are seeing resurgence, which is good news, so there's room for co-existence," says Nomura's Jonathan Rogers.
Integrating order and execution management and risk management across a unified platform can cut down on risk. "An integrated risk system aligns the market risk, compliance and trading functions in real-time, providing common oversight to all stakeholders," said Phil McCabe of Bloomberg.
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Banks are benefiting from advances in machine learning and artificial intelligence, with programs handling some customer-facing functions. Chatbots and virtual assistants are able to provide financial advice.
Developers of distributed ledger technology believe fears that quantum computing might one day grow powerful enough to threaten the security of DLT are premature. Digital Asset Holdings Chief Business Development Officer Chris Church said at SIFMA OPS that the encryption of DLT will be improved before quantum computing can be developed to the point where it poses any serious threat.
Trading based on artificial intelligence is increasing, and banks are exploring use of machine learning for risk modeling. But AI and machine learning models sometimes lack transparency required by regulators, experts say.
A Northern Trust survey of the Asia-Pacific region reveals widespread expectations that use of artificial intelligence will become standard practice throughout the financial industry within five years. This contrasts with attitudes in Europe, where a SimCorp survey finds only 15% of investment chiefs at buy-side firms consider AI deployment a priority for 2018.
The Federal Reserve will ask for public comment on whether it should revise guidance for living wills for major US banks and foreign-based banks that do business in the US, Vice Chairman for Supervision Randal Quarles said. The move is part of an initiative to improve cooperation among US and foreign regulators in the event an international bank fails, he said.
Regulators are monitoring developments in financial technology for signs of risk to stability or competition, says William Coen, secretary general of the Basel Committee on Banking Supervision. Coen says he sees no cause for concern, "but we will be watching."
Robotics process automation (RPA) can be an improvement over more basic technologies but is not as advanced as artificial intelligence or machine learning. Indeed, RPA is making fintech solutions attainable for firms of all sizes and in a timely manner. Inside this note from SIFMA Insights, we analyze what RPA is and what it is not, and identify opportunities for RPA in financial services. With results from an anonymous survey of our members, this report was published as the industry gathered in Phoenix for SIFMA OPS 2018.
Fintech continues to drive the transformation of the securities industry: Artificial intelligence and machine learning are giving firms new insights, blockchain projects are moving closer to production, and robotics are pushing the boundaries of industry operations. SIFMA's Fintech Conference will bring together innovators and industry leaders to discuss the emerging tech evolution and how existing regulatory frameworks can accommodate transformative technologies. Featuring keynote discussions with Craig Phillips from the US Treasury and Rob High, CTO for IBM Watson. Register today to join us at the SIFMA Conference Center in NYC.