As the regulatory juggernaut rolls on, the fines being currently meted out are just the tip of the iceberg. Analysts are predicting that more penalties are in store for foreign exchange manipulation and Libor-rigging; this would take the total fines levied on the banking industry above $300bn since 2010. As major institutional investors reevaluate their options, the fines facing banks for currency rigging may increase in the next couple of years to more than $16.5bn.
On top of regulatory fines, banks could be sued for billions in damages from disgruntled clients in the wake of the foreign exchange scandal (Libor).
The Federal Reserve, the US Securities and Exchange Commission, US Department of Justice, New York’s Department of Financial Services, and the Hong Kong Monetary Authority are all in the process of investigating foreign exchange rigging. Since criminal investigations are ongoing, the final costs could be far higher. Ratings could be affected if future fines or business sanctions are large enough to affect capital or there are material constraints on operations.
Can technology fix regulatory non-compliance?
Technology in the form of big data can be harnessed to avoid regulatory non-compliance, but not in the knee jerk reaction of many non-compliant banks. For big data to be effective, it needs to be utilized in a productive and cost efficient manner. If big data governance is applied well in time, it will take the sting out of the regulatory noose tightening around the necks of embattled banks. Thus, effective data handling can enable banks to respond adequately to the demands of compliance.
And the solution is?
For far too long, our banks have made hay while the sun shone, but regulatory curbs have increasingly bogged them down in quicksand. That is precisely why Hexanika has entered the financial minefield to aid banks in big data collection and avoid the pitfalls of regulatory non-compliance. You can find out more about Hexanika and it’s products at https://hexanika.com/