The Impact of Automation in Financial Services

Risk management in financial services is constantly changing to keep up with the launch of new financial products and the introduction of new processes into all facets of the business. As a consequence, there is a need for the risk manager to rely on and keep up to date with automation as a way of ensuring optimum efficiency of risk management and risk mitigation.

CAIM member Kevin McHugh, an experienced and well-respected risk and governance manager in the Irish financial services industry, presented at our recent virtual Members’ Meeting and gave an insightful talk on the role automation can play and the expected benefits that can be derived when it is used for these purposes.

Kevin profiled the extent of international financial services in Ireland, listing the number of top global banks, aircraft leasing and insurers with operations here, noting that 440k people worked in the sector across more than 430 firms. He briefly outlined the strategy being adopted to maintain and grow Ireland’s share of this market, with its strong emphasis on the operating environment, technology and innovation, and need for talent. Matched with this he referred to the challenges facing the sector here including the rebuilding of trust and cost income pressures.

As regards the role of technology in maintaining strength in the sector, big advances have been made in the areas of artificial intelligence, robotics, block chain and big data and he briefly outlined how these are instrumental in changing business models and processes and in turn leading to the emergence of unregulated and specialist business providers.

Technology

In referring to technology, he noted the differences between techfin firms and fintech firms, how they act as partners and competitors and how they must compete for talent and be selective in where they invest.

TechFin

Kevin discussed the role the Board had to play in the sector, noting that they must place greater emphasis on skills profile, diversity and how they access specialist talent. Turning to risk management in this environment, he outlined what he believes its strategic role to be, the need to understand risk return relationship, how operational excellence becomes more important through automated processes and the need to integrate risk processes with business processes.

Risk Management

Finally, he concluded by stating how risk management should act as a strategic partner to the business, noting the use of rapid KPIs when things go wrong; carrying out root cause analysis to help solve problems; using technology to manage and improve service; employing data management and data analysis; and resourcing up with specialist skills.

Risk Management - Strategic Partner