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Q3 2020

Ian Nelson, Head of Banking & Capital Markets, and our banking team have compiled a collection of KPMG's latest publications and articles which focus on developments in, and issues facing the banking industry. 

New Reality

Every institution in the banking and capital markets sector is having to uproot their operational models and deal with new asks from their regulators as the sector attempts to work through the impact of the COVID-19 crisis and work towards an amended way of executing their functions, taking into account the current reality. Financial services institutions need to define and apply new “Remote Governance and Controls” and regulators should seek to respond to and drive this change.

In the “Banking in the new Reality” series of both written and video materials, there is a discussion on six macro trends that will be pivotal to banks’ future success. These trends are:

  • New channels which are reconfiguring the landscape
  • Harnessing the shift to a digital economy
  • Reimagining cost and the emergence of new operating models
  • Defining the new reality of the ways we work
  • Rewriting the risk management playbook
  • Values and purpose front and centre

The Key Deal Drivers page closely examines areas that will be impacting the transactions market in the banking sector for the second half of 2020. This starts with the trending market topics, namely the increased prominence of Fintech deals, the increased oversight of regulators on deals and the steady NPL sales expected in H2 2020. There is an associated paper which breaks down the impact of COVID 19 on banking M&A activity and a description of the global and regional M&A outlook.

For more information on how KPMG can help, please visit our Risk Consulting homepage.

Fitness and Probity

In July 2018, the CBI announced its intention to introduce an Individual Accountability Framework and Senior Executive Accountability Regime (SEAR). This has significant implications for regulated financial services firms in Ireland, in particular, the adaptations to the current Fitness and Probity regime. Firms must assess their position under the current Fitness & Probity regime and consider how they will address a host of challenges which will arise under the new regime.

KPMG has outlined several practical steps that Banks can take to address the current requirements and prepare for the new environment and enhanced obligations under Individual Accountability and SEAR.

This follows on from the KPMG Individual accountability & SEAR article on how the COVID-19 crisis has renewed business focus on Operational Risk & Resilience and Business Continuity Planning, which are key concepts in the Individual Accountability Framework and SEAR.

For more information on how KPMG can help, please contact Gillian Kelly.

Sustainable Finance

KPMG has produced a paper which addresses how the banking sector can begin working towards “Delivering sustainable finance”. This topic is ubiquitous on the regulatory agenda due to governments' commitments to climate change and is rising in prominence as the COVID-19 pandemic has highlighted that business sectors are deeply interconnected across borders. The search for consistency, the reporting of ESG risks, the setting of low carbon benchmarks and product governance and sustainability assessments are all covered in this paper.

This is complemented by an article which tackles multiple aspects of the sustainable finance horizon in the post COVID-19 world. Kevin Smith, Head of KPMG Private Enterprise EMA, discussed some of the key themes with sustainability and tech post COVID-19 in an article outlining the insights garnered from the Collisions at Home conference. 

For more information on how KPMG can help, please visit our Sustainable Finance homepage. 

Fintech

The semi-annual “Pulse of Fintech” newsletter was published for H1 2020. In this newsletter there was a breakdown all of the market trends and activity which has occurred in the Fintech sector over the first half of 2020. This newsletter includes a look at how corporate fintech investment remains robust in the face of COVID-19 and an assessment of the accelerated digital trends that will shape fintech’s future.

The newsletter also looked at how challenger banks are raising big VC rounds in Europe, and this was expanded on in the Venture Pulse Q2 2020 which provides a global analysis of venture funding, with Q2 representing a “strong quarter for VC investment in Ireland”.

For more information on how KPMG can help, please visit our Fintech homepage.

Product Assurance

The COVID-19 crisis has renewed business focus on Operational Risk & resilience, and Business Continuity Planning (BCP). KPMG has designed a bespoke methodology that will provide organisations with a comprehensive understanding of their products and underlying control environment and reduce the time spent by the 1st and 2nd Line Of Defence on assuring products through introducing automation and preventative controls.

The regulatory basis, the issues faced by market operators and the bespoke methodology, are all outlined in a brochure available on the Product Assurance homepage.

For more information on how KPMG can help, please contact Gillian Kelly

Regulatory Updates

As part of the Banking in the new Reality series, the role of the National Competent Authorities in “Regulating the new reality” will be a key consideration for the sector, as financial services institutions are called upon to adjust their focus and support the wider recovery of economic systems after the damage caused by the previous 2 quarters.

In the Basel 4: the journey continues paper, KPMG assess the three possible scenarios relating to the amended Basel 4 timeline and how these scenarios will interact with the current regulatory and operational constraints posed by COVID-19. It also looks at how challenges arising from COVID-19 might impact the trajectory and regulatory imperatives of the Basel 4 reforms going forward.

For more information on how KPMG can help with assessing the impact of regulatory developments please visit the regulatory consulting homepage

How can KPMG help?

KPMG has a large team of professionals with extensive knowledge and expertise in Financial Services, Banking, Aviation Finance and Leasing, Insurance and Asset Management. KPMG Ireland can leverage a network of multidisciplinary professionals, stretching across Europe and beyond. Supported by this global network KPMG Ireland can provide a broad range of support, advice and guidance on how to address the challenges you face.  

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