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In order for financial services companies in Ireland to achieve sustained business value, they must ‘go beyond’ compliance as they look to differentiate themselves from competitors as compliance becomes the norm, according to Leon J. Bloom, Deputy Managing Partner, Global Financial Services Industry Practice, Deloitte & Touche LLP.

Speaking at the Finance Dublin Conference today, Bloom also said that as the market looks to accommodate multinational financial conglomerates, compliance regulation will similarly evolve in sophistication and companies will be forced to continually address risk and capital management practices in order to comply. “Regulated institutions have been challenged to increase the sophistication of their risk and capital management practices to achieve compliance.  And they will need to continue to do this - I have no doubt that, over the next 20 years, we will see the establishment of an even more sophisticated capital market model that will accommodate large multinational financial conglomerates and more prominent capital markets. This will likely have major implications for corporate and financial governance,” said Bloom.

“If we turn the clock back eight years to the initial paper on Basel II, it is extraordinary how much innovation there has been with regard to risk management, risk measurement and capital management practices. I am confident that momentum will continue to build in evolving these practices.  However, I do believe that it is only through a unifying financial governance framework that sustained business value will be achieved.”

He added that financial services companies will need to ‘go beyond’ compliance in order to help them stand out from the crowd.

“One way to achieve this is to move to ever-higher standards of compliance and use it as a competitive advantage in order to establish a position of trust in the marketplace.  And as those ever-higher standards are upheld, organisations that may not be directly affected by the legislation—private companies, not for profit organisations—see their own need to raise standards in order to keep pace.  Thus the bar is raised across the board.

“Another way—and one that does not mutually exclude the previous position—is to drive down the cost of compliance and wring as much value out of it as possible. As organisations revisit their risk and capital management practices to achieve compliance, they find that the enhanced practices can be leveraged to support capital efficiency objectives and a financial governance framework,” commented Bloom.

ENDS

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