The importance of managing the integration and adoption of legacy systems to keep up with the rapid evolution of technology is well-documented.
Management teams and boards looking at technological transformation should not do so in isolation of regulatory change. This goes for Brexit planning, too.
As industry consolidation continues apace and the complexity of combining legacy systems pervades, Brexit should be a big consideration in making sure any operational transformation project factors in future compliance requirements.
Although banks are front of mind in assessing the impact of a loss of access to settlement and custody rights, firms need to map the impacting of maintaining access to the EU27’s market infrastructure.
In not accounting for Brexit in decisions about strategy and transformation, firms could soon find their front-end systems and booking models becoming “dumb” technology if clearing and settlement rights aren’t upheld.
On the face it, that would appear to be a longer-term risk out to 2020 when the industry accounts for the transition period.
But getting Brexit-ready is about being well-positioned for change as early as March 2019, and that is less than eight months away.
Location, location, location
In maintaining access rights, the need for a registered presence in the EU27 may soon become apparent.
It is easy to treat location requirements as a legal issue, but it is a people question, too.
Loss of cross-border passports will also create uncertainty for cross-border contracts where elements of the contract remain to be performed after the date of the UK’s exit from the EU.
This will typically impact firms offering longer dated derivative products but may impact wealth and advisory firms where they offer these products.
Access to talent and the threat of a post-Brexit skills shortage is nothing new and it is the major Brexit uncertainty that cannot yet be quantified.
But as a relationship business, assessing the potential impact on your employees is crucial.
So, if HR isn’t involved in the internal project team, then they should be. They will be key in providing knowledge of employment law and the legal requirements in the location such as the European Working Time Directive.
Identifying key-man risk will be central to ensuring firms’ own transition periods proceeds smoothly.
Those hiring decisions need to be made sooner rather than later, with many firms already putting the right people in the right location where Germany, France, Luxembourg and Ireland are currently shouting the loudest for potential recruits.
