The current Situation of MiFID2
The Markets in Financial Instruments Directive 2 (MiFID 2) was proposed in 2011, but five years on and financial institutions are still struggling to implement the changes. Is it a case of technical challenge, or resistance to change?
The MiFID 2 was a reactive measure towards the 2008 financial crisis that exposed weaknesses in the legislation. The aim of implementing MiFID 2 was to protect financial consumers and investors via market structure framework and improve equity market transparency.
With the impending deadline and differing expectations from the legislation, what can companies do to stay ahead?
Integrate Technology into banking services
Technology is getting more sophisticated and have given bank customers high expectations. The ability to act quickly and effectively with rapid access to critical information will distinguish the successful banks of the future. Banks can create a positive user experience for both their staff and consumers by integrating technology in the following areas:Direct Marketing, Customer Service and Business Processes. Additionally, consistent management and decision support systems provide the bank that competitive edge to forge ahead in the banking marketplace.
Innovate banking operations
Bank CIOs and COOs need new approaches to the modernization of operational systems to support digital banking strategies. While a continued drive for cost and efficiency needs to be sustained, operations should transform to focus on enabling new business models. Bank system assets and functions must be accessible and usable in end-users’ contexts across internal and external bank boundaries to enable personalized services and amplified decision making. This is costly and potentially high-risk, but can provide material benefits to banks and their customers, such as full-service mobile banking applications that allow end-users access on-demand. Operations professionals should develop compelling cases for IT innovation, and recommend more-appropriate front-to-back and internal-to-external architectures, while identifying their risks and potential costs against business benefits.
To do so, banks should develop and execute a digital banking strategy as suggested below:
- Adapt to digital business patterns.
- Define the digital ecosystem.
- Explore the programmable economy.
- Create a digital advisor.
- Define banking use cases for the Internet of Things.
- Deploy digital banking platforms that not only offer channel integration, but also enable digitalisation, personalization and creation of digital assets.
- Deploy API platforms, apps and app stores that enable mobility, extend product and service accessibility and create entirely new business models.
- Evaluate emerging Technologies
Reinvent payment methods
Retail customers’ consumption patterns and commercial customers’ business processes are becoming less visible to banks, while customers are gaining more visibility into their financial choices via new competitors and interfaces. For this reason, digital wallet strategies are becoming essential for banks to influence an increasingly fragmented demand and a more complex financial supply chain. To deliver on these requirements, bank executives need to build a transformational roadmap now for the modernization of their retail payment and transaction banking systems and architectures. As a result, banks are modernising their payment architectures to control cost, improve compliance, risk and liquidity management, as well as achieve greater visibility on payment processes to build new processes and partnerships. This in turn will help grow their influence on the new digital payment value chain.
To do so, banks should:
- Influence and build trust over the customer decision and acquisition process with digital wallets.
- Develop a roadmap for digital wallet functionalities and related services.
- Create a “future of money” business architecture.
- Evaluate emerging technologies in the digital payment space.
Adaption and Adoption
In summary, banks need to adapt to the new landscape and adopt new technologies and/or solutions. The above-mentioned methods are steered towards providing a secure and flexible experience for end users. Crealogix has developed an advisory solution — a Customer-focused, Scalable, Secure and MiFID2-ready solution for Financial Advisors and Wealth Managers.back