What Did the IMF Call a "Significant Disruption" to the Financial Landscape?

The open banking era is upon us, but banking basics still need to be executed as financial institutions weave through the disruption. Most financial institutions do an exceptional job of managing often overwhelming levels of compliance requirements, and must continually navigate change, especially as new tech presents both challenges and opportunities.

• Significant disruption is likely to come from the big tech firms who will use their enormous customer bases and deep pockets to offer financial products
• Other disruptions to financial services include the 2021 phase out of LIBOR, following the 2012 rate manipulations
• As of April 2019, there were $300 trillion in contracts that use LIBOR as a reference rate
• At least $35 trillion in contract value will not yet have expired by the end of 2021
• Another disruption to finance markets is the advent of cryptocurrency with 70% of central banks studying the concept
• But 85% of central banks are not likely to issue a general purpose Central Bank Digital Currency in the next 6 years

Why the Banking Industry Needs Reform

Five Scandals That Show Why We Need Structural Reform in the Banking Industry

From Truthout –

“Multibillion-dollar scandals have continued to occur at big banks across the world, throwing the integrity of the banking system into question. The current state of banking ethics, the enormous size of banks and the banks' inability to detect real-time fraud all contribute to the ongoing failures in preventing serious banking crimes. In addition to this, the big banks have complicated organizational structures with thousands of subsidiaries operating across multiple markets. Bank acquisitions and cross-ownerships across the globe can make it difficult to unwind trades and transactions in the case of a bank's failure during a crisis.”

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Bank of England says it will map out move to Libor alternative in 2016

From Reuters –

“The Bank of England will spell out next year how markets can migrate to a new "risk-free" interest rate benchmark after banks were fined billions of dollars for trying to rig Libor, the existing benchmark, a senior BoE official said on Wednesday.

Chris Salmon, the BoE's executive director for markets, said Libor, or the London Interbank Offered Rate, a benchmark for interest rates that banks charge each other, remains too prevalent.

Formerly overseen by the British Bankers' Association (BBA), Libor rates have come under scrutiny after a number of traders were accused of colluding to rig the rate. The rates are calculated through an "honor system" in which a panel of banks report their estimated costs of borrowing from each other in different currencies over differing periods.”

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