How banks boost risk controls as tokenisation, AI reshape capital markets

Real-time handling and monitoring is the way to go.

Banks are increasingly contending with operation resilience as tokenisation, artificial intelligence (AI) and real-time infrastructure reshape capital markets.

“How do you get real time visibility into your risks and controls? How do you measure? How do you mitigate? That's a big consideration I see in the firms,” said Sinchan Banerjee, Partner - FS Consulting, KPMG Singapore.

Capital markets’ risk and controls have historically been traditional: siloed, manual, reactive. Today, organisations are using predictive analysis in risk management.

“It’s going towards more real-time handling and monitoring, and that brings in efficiencies that reduces your cost and enables faster decision-making and arguably protects your business a lot better as well,” Banerjee said.

Banerjee observed his cyber colleagues dealing with enhanced cyber threats usings advanced predictive analytics and technology.

Risk controls are also now being designed for scale and speed.

“It’s got to be flexible to your markets, to your products as the markets you are entering [and] the products are evolving,” he said.

Developments like T+1 settlement, or moving to T+0, requires banks to evolve their back control framework in order to enable faster settlement.

“You need to enable fewer breaks and simpler reconciliation, to create the capacity that your team needs to have around that,” Banerjee said.

Enhanced and automated reconciliations help bring down costs, increase efficiency, and create enhanced capacity for banks’ teams to work on other value-adding topics effectively, he added.

Banerjee said that banks will have to build their risk controls into the fabric of their business. “As you’re building your business, think of what you’re going to build in there to drive growth and enable innovation effectively.”