Speaker 1: Welcome, everyone. I'm Pat Corker. I'm Luxoff's Practice Lead for External Relations Practice. I'm here with two astute guests to focus on the impact of regulatory and compliance within financial services. I'd like to start by having them introduce themselves before we begin a great dialogue around this. Oliver?

Speaker 2: Hi. I'm Oliver Bishop. I'm a manager at Alexia. I've spent all my career so far in consulting, mainly in strategy, but like a lot of consultants over the last couple of years, I've been spending a huge amount of time in regulation, helping in particular clients get ready for MIFID 2.

Speaker 3: Mark? Hi. I'm Mark Maynard. I work in Luxoff in Excelion, which is the division that focuses on financial services. I've been working in technology for investment banks for, I think, now about 20 years, and of late focused on the regulatory agenda.

Speaker 1: Welcome, gentlemen. I think the reason why the introduction is particularly important here is to show the audience that we're coming from two different angles around a very important topic. So let's start with the high-level question. I think the words regulation, compliance, policy have been thrown around quite a bit in this space. How are you both seeing this impact financial services from your end-user client point of view?

Speaker 3: Mark? I guess 15 years or so ago, the regulatory agenda started to emerge, and desks started appointing compliance officers, but you'd often see them asleep at their desk. You won't see that anymore. The agenda around regulation has certainly moved from being something that was bolt-on, perhaps something that back office and a side tech group dealt with, to something that's very much at the forefront of everything that a bank does. It's very much part of what front office does now, and as a result, the technology stack has had to be re-engineered from literally the bottom all the way through to the top to support that.

Speaker 2: Oliver? How are you seeing it from that angle? Right. I'm talking maybe 10 years ago or so. People would be constantly seeing it as a bolt-on on the back end, so you need to report transactions. You need to know that the date is correct, so people would look right to the back office, see where the trade's getting settled. They know it's right, and then there'd probably be some kind of at least semi-manual process stuck on the back. Nowadays, basically, requirements are much, much, much more to the front end, so there's now real-time reporting of trades, and therefore, that process just doesn't work. Regulators probably also didn't consider the impact on the markets as much as they should have done. Generally, it was a much less collaborative approach between regulators and banks back then, and we've seen that improve significantly, so organizations such as ESMA sit in the middle and ultimately take feedback from the banks and make sure that regulation works for banks as well. But yeah, it's basically, there's been a much more strategic approach need to be taken from an IT architecture perspective.

Speaker 1: So what we're seeing in terms of service procurement, there's an intersection of buyers within end user organizations, business side, technology side. Has that changed the way that regulation is being procured in terms of service provider offerings, or hasn't it not?

Speaker 3: So I think there's, obviously, the customers are the same, they're still the banks. There's definitely been a change of focus, so there's a lot more, I guess, input from regulatory officers and compliance officers, they have a lot more say. And I think, as part of that, the focus, perhaps, of what we're asked to do has changed, whereby, I guess, up to maybe even just five years ago, front office would have a big say on where the money was spent and what we were doing. And over the last few years, we've seen that's changed. And now, it's the regulatory guys that are driving the work packages that we're asked to look at.

Speaker 2: Are you seeing a similar area within the consulting world? Yeah, similar. But I'd probably add, it's not so much the front office or the business owners pulling back as the strengthening of those compliance roles, almost. So they have much more of a say in who's buying, but regulation has ultimately pushed the requirements of that purchase much further up the agenda of senior managers and business owners. So it's taken a lot more seriously on all sides. So those people, the business people, are required to have much better understanding of what they're buying, because ultimately, when they come to implement it and use it, they are much more accountable for it than they ever used to be. A lot more providers, old information technology providers are making new services. You're getting startups appearing. And really, just the landscape is changing.

Speaker 1: And in terms of the role that the government's playing vis-a-vis policymaking, how has that had to change the way that we are positioning, not really for today, but tomorrow, in terms of what's upcoming, what could be potentially upcoming? And in terms of the speed that the end users are actually implementing this across the enterprise, has the focus now been more around the policymaking in and of itself, rather than just simply implementing the technology and waiting around for the next piece? Because you want to stay ahead of the game. Is that a fair statement?

Speaker 3: It is. So I think one of the big problems, I guess, that technology now has is interpretation of the requirements. And that's always a big sticking point. The legislation is written, and I think at the time of writing it, there was an intention. The intention is not always clear when you come to interpret it and then implement it. And what we see is that there's an increasing reliance, actually, on technology to interpret what the requirement is and come up with an appropriate solution.

Speaker 1: Yeah. Yeah. Is that playing a role, too, in the consulting world?

Speaker 2: It's coming a bit closer, I guess. So the requirements were kind of much less clearly written and left to a lot of interpretation. And therefore, particularly when there's a skills gap in some compliance roles and some operational roles who are actually saying, what should we report, what should we do, how should we structure our business, there was lack of clarity and a need for a lot of change. So whilst you would think that something that was written was written, and that was it, you realize that either you failed to interpret it correctly, or the market's view has changed, or particularly, as we saw from the regulators with EMEA, things have been staged. So it's not just kind of one big bang, which ultimately is kind of slightly lessens the impact. But regulators and organizations are getting closer together. So it is getting better, and it is getting more predictable, but the changes are becoming more significant, ultimately.