May 20198 IN MY V EWIMPACT OF DIGITAL TRANSFORMATION OF FINANCIAL SERVICESBY MAAIKE VAN MEER, GENERAL COUNSEL, AEGON ASIAIn 1933, in the wake of the 1929 Wall Street Crash, the United States Congress established the Federal Deposit Insurance Corporation (FDIC) and prohibited the combination of commercial and investment banking, imposing broad restrictions on what was then seen as speculative bank activities. This regulation, with various other banking reforms, became the Banking Act of 1933, colloquially known as the Glass-Steagall Act. Since then, many regulations have followed which has brought us where we are today, an environment where technology-based solutions are imperative to support expanding regulations and requirements for transparency.Typically, the emergence of new regulations is peaking after a financial crisis or high profile fraudulent incident. However, we should not underestimate the continuous evolution of existing regulations, as well as the efforts of regulators to establish more transparent, standardized and detailed reporting requirements. Compliance work is not limited to satisfying the compliance regime; there are the equally dominant implementation aspects of new and changing regulations:New regulationsA large number of new regulations have been implemented over the last decades around risk and capital (i.e. Solvency, RBC), accounting and reporting standards (i.e. IFRS), tax harmonization (f.e. CRS), privacy regulations (i.e. GDPR) and the global anti-corruption measures (i.e. FCPA).Changing regulationsRegulations tend to get relaxed when higher risk appetites grow, which is typical for booming economic cycles. After economic contractions, politicians and regulators tend to pressure financial services institutions towards a more stringent compliance culture.These regulations, the changes that come with it and the ever-growing requirement for straight through process and transparency does not align well with (decades) old information and process architectures that are embedded in the legacy work processes and computer systems that perform a large part of transactions in financial services. The required changes required are expensive to carry through.Compliance officers should no longer be ticking boxes or being perceived as "business prevention officers". Interpretation of new or changing regulations and aligning these with corporate strategy while balancing risk appetite requires a compliance officer who is able to navigate both the rules as well as the commercial strategy. Whatever the outcome of that process, it will have a profound impact on the underlying processes and systems and operations, which requires a level of agility that is difficult to implement in computer systems.Maaike van Meer
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