On Monitoring Global Financial Industries

Regulators have made monitoring global clients more difficult and expensive in the time of financial crisis. Brian Moynihan, the chief executive of Bank of America, and Bill Winters, CEO of Standard Chartered, criticized the tightening of regulatory procedures that were implemented since the start of the crisis.

When the two veteran bankers spoke during the World Economic Forum in Davos, they both agreed that the demands of clients for increased global services meet their needs worldwide, which challenges both banks.

“There was a disconnect between the absolute globalization of companies and the ring-fencing of countries’ on a regulatory basis,” says Mr. Moynihan.

Mr. Moynihan emphasized the need for country-by-country regulatory procedures post-crisis, which could be a challenge. He said, “All that stuff is de-globalizing while customers want us to work for them on a global basis.” According to him, customers vary from individuals to large corporations.

Meanwhile, Bill Winters, who is currently running emerging markets-focused Standard Chartered since June last year, commented on the regulatory fragmentation, “It’s real and it’s expensive.”

“It doesn’t stop the global financial system, it just makes it more expensive,” he added.

These two heads agree that there must be a playing field for corporations involved in payment transactions, in response to the rise of advanced financial technology companies that make use of mobile and other payment methods.

“To the extent that large chunks of the population are using their SIM cards as their value store, someone should be watching them,” says Mr. Winters, who named Vodafone as an example of a telecom company that provide such services in countries like Kenya, which aren’t regulated in any way.

“The payment system has to be regulated and participants need to be observed,” he said. “FinTech has a role to play but where the issue is systemic it needs to be dealt in the same way.”

To that, Mr. Moynihan agreed, saying that there should be a standard among financial technology companies like that of regulated banks in terms of cyber security. “If you had a disruption (to the payments system) of any size, you’d have an effect,” he said.

The head of private equity company Blackstone, Steve Schwarzman, who was among the panel, said that regulations made the world less safe in certain aspects. “By forcing banks out of the dealer market, there’s no one to make markets in fixed income. There’s no one to be in the middle,” he added.

Gavin Paterson, CEO of BT Group, said, “This is not just about identity, it is about security and prosperity.”

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