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What is it like running a start-up during a global pandemic?

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What is it like running a start-up during a global pandemic?

As Neofin celebrates its 1st Birthday we take a look back at Neofin’s first year. 2020 has been one of unprecedented economic misery, especially for those who work in the hospitality and retail sectors. Despite the global pandemic according to the Office for National Statistics the number of new companies being created in the UK compared with 2019 has soared in the second half of 2020.

In the beginning

Less than one month in, it became clear to me that the overall context was not going to be favourable at all. When you launch a new business, the first years are always going to be difficult and it is not unusual to face challenges you had not anticipated and, thus, planned for. 2020 went beyond any scenario I could have imagined, as I am sure was the case for many businesses unfortunately. Despite the challenging circumstances Neofin has gone from strength to strength taking on a number of new staff and winning new contracts, helping clients with an accelerated transformation to enhance efficiency and effectiveness, enabling risk organizations to deal with the pandemic while addressing rising regulatory and cost pressures.

Nothing is normal

The effects of the world-wide lockdown has been that businesses are adapting while consumers are building new purchasing habits as they value safety, convenience and speed. Digital spending has become the new normal with it being reported that three out of four buyers are using digital channels for the first time and the NEW-normal will see them continue to use them when lockdown eventually ends.

Think Long-Term But Act Short-Term

For Neofin Advisory in the pandemic we have needed to multiply our efforts by 10 to get a 10th of the return we would expect under normal circumstances. I think that what kept us going was to not deviate or get distracted from the longer term goals and the real purpose of embarking on such a wonderful journey whilst being as creative, dynamic and flexible as possible in the short term to find solutions to get us through this.

So far so good

So far so good but 2021 is likely to be another difficult year for everyone including Neofin, so this is far from being over. Our firm currently operates in two locations: London and Lisbon. The experience and expertise of our multicultural and multilinguistic team acquired in leading projects in global organisations allows us to support clients operating in pan-European and US markets.

Neofin are constantly developing and marketing a solution that customers need while evolving and adapting to the market. The foundation of our service offering in each critical area of our business is represented by our core delivery team and supported by truly knowledgeable advisors and through our strategic alliances. Neofin’s capabilities are a key differentiating factor in comparison to our peers and in the long run will be our USP.

Top three trends/challenges for risk management in 2021?

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Top three trends/challenges for risk management in 2021?

As we welcome in the new year our thoughts come to what 2021 has in store. Besides the ongoing Covid-19 pandemic and going back into full lockdown there are three trends/challenges for risk management in 2021 tat spring to mind.

Transition out of the regulatory wave

The first challenge will be to transition out of the regulatory wave that started after the 2008 crisis. More specifically, all remediation activities within credit risk where IRB and IFRS 9 models still require significant adjustments. On the non-financial risk side, financial institutions will keep investing to strengthen their operational and business resilience whilst further work on Conduct should be expected. Additionally, I expect large programmes such as IBOR transition and post-Brexit arrangements to also consume resources and time on the risk management agenda until the end of the year.

Emerging risks

Secondly, emerging risks such climate change and cyber – even though these have been on CRO agendas for a while now – will be another key focus.

Acceleration of the transition to increased automation

And finally, the third challenge / trend could be the much-expected acceleration of the transition to increased automation and further integration of RPA/AI solutions. The revolution in this space for Risk Management is yet to come.

What are the PRA’s priorities are for 2021?

The obvious one is to ensure that the latest regulations are implemented and well embedded. There is still a lot of focus on model remediation activities. Still, climate change is definitely a priority and its inclusion in this year’s stress testing exercise is a clear message that banks need to take climate change risk very seriously. In my opinion, this initiative will be a great pulse check for the industry as it will give more clarity on where large banks stand and whether/when they can meet the ambitious goals that have been set.

Also, we shouldn’t forget that we now operate in a post-Brexit world. The PRA (Prudential Regulation Authority) is already playing a bigger role in its oversight capacity of foreign banks with branches in the UK. We expect the UK regulators to go into greater supervisory depth in order to review group level information from outside of the UK. However, the bigger question for me is whether we should expect a change in direction from UK regulators that would be led or influenced by the political, social and economic agenda and eventually play a role to ensure that the City remains an attractive place to do business.

A little more advice…

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Welcome advice

Olivier Dyer, Senior Advisor

Please let’s welcome the new member of the Neofin Advisory team Olivier Dyer, who joins us as Senior Advisor.

Olivier has spent 20 years building BNP Paribas Global Market Flow business activities in various senior positions as Global Head of FX Sales, FX Director for Europe, Global Head of the STIR group with Paribas Capital Market in London and Treasurer for Banque Paribas.

Olivier was Founder & CEO of Agata Capital a French Quant asset manager and Economic Research provider and one of the founding partners of 99 Advisory.

French born Olivier is more than qualified with an ENSIAA – Agronomic engineer from National d’Agronomie and an MSc in Economics & Management from IGIA-Groupe ESSEC.

With 35+ years experience in Financial Services with particular focus on Global Market activities, Olivier is an expert in the CIB & Securities Services and projects related to: Conduct, Permanent Control, Regulatory and Risk Mitigation. Olivier took part in the development of BNP Paribas’ Global Markets business and then co-founded 99 Advisory in 2010.

As a Senior Advisor for Neofin Advisory, Olivier brings his key skills as a specialist of CIB and Securities Services Businesses, Permanent control & Regulatory expertise, Reorganisation management and Organisation and strategy.

Welcome on-board Olivier!

What challenges does remote working present for risk management?

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What challenges does remote working present for risk management?

Like in any transition, there are known and unknown challenges ahead. The Covid-19 pandemic has meant the majority of office based workers are having to relocate their day to day business activities to their homes. Remote working has a vast amount of challenges for all involved, but particular concerns for risk management include:

Day-to-day operational activities

The first one is linked to day-to-day operational activities where financial institutions need to ensure an appropriate approach to working remotely, taking into account their respective risk culture. This is not just about having a stable connection and being able to join busy, back-to-back video calls throughout the day, but rather rethinking how teams retain their risk management culture and capabilities, whilst having to integrate different levels of stress and disruption originating from the pandemic. For example, the risk culture within an organisation is likely to be weakened due to reduced interactions, fewer informal chats or one-to-one sessions with SMEs, which we know have been critical in shaping stronger risk management cultures in the last 10 years. This is particularly relevant among more junior team members and new joiners.

Cyber risk

The second challenge relates to cyber risk. As remote working becomes more established, exposure to cyber risk will increase. I don’t believe that the industry has yet had the opportunity to test all frameworks and capabilities developed over the last few years, so it will be interesting to check how well some banks will do compared to others. It will also be interesting to see how regulators look at it, particularly in light of the recent operational and business resilience regulatory initiatives.

What impact will the pandemic will have on IFRS 9 modelling?

To put it mildly, the pandemic may have tested the IFRS 9 models to their limit. In the short term, it has triggered the need to review and re-calibrate models. In the medium term, it could well prompt structural changes to the way provisioning is estimated and managed. I think we are still learning to navigate through these strange times so let’s wait and see.

Welcome on board

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Shahzeb Shaikh – CIB Regulatory Lead

Please let’s welcome the new member of the Neofin Advisory team Shahzeb Shaikh who joins us as the CIB Regulatory Lead from the 22nd April 2020.

Shahzeb joins Neofin Advisory from KPMG UK where he has spent 8 years gaining solid experience of investment banking and trading businesses, first within the Banking Audit Department followed by the Banking Risk Advisory practice.

Qualifying at the London School of Economics in an LLB Bachelor of Laws and ICAEW Charted Accountant qualification at ACA, Shehzeb’s specialties are Financial risk, Assurance, Compliance and Finance.

With 8+ years in financial services covering projects in investment banking and trading businesses, Shahzeb has conducted audit projects as a financial auditor and then projects for KPMG’s Financial Risk Advisory department. With expertise in primarily: Financial risk, Regulatory assurance, Control frameworks, Conduct, Global FX, Shehzeb has managed projects across banking risk with a particular focus on delivering engagements in relation to wholesale conduct risk arising from interest rate and FX trading activities.

As a valued member of the Neofin team, Shahzeb will play a vital role using his technical IB knowledge, financial analysis, risk assessments and audit experience to assist Neofin’s clients in their journey to regulatory compliance.

Welcome to the team!

From small beginnings…

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From small beginnings…

It is with great pleasure that I can announce the launch of Neofin Advisory an independent boutique consultancy firm providing services to Banks and Asset Managers.

We start our journey with a small team who has a strong track record and significant experience in financial services globally. We offer critical advice and insights on best industry practices covering strategy, business, operational and regulatory fields. We do so with increased agility and a deeply collaborative way to ensure ‘hands-on’
tailored solutions throughout all stages of our engagement.

We have decades of combined experience in both the financial and consulting industry, bringing content knowledge whilst being pragmatic and delivery focused. This is supplemented by key insights on best industry practices through our strong and diversified global network.

Our mission is to help our clients thrive in a more socially conscious environment and prepare them for the future changes in their day-to-day business.

For additional information, you can visit our website at http://www.neofin.co.uk.
Please feel free to reach out directly should you wish to discuss any specific matter. Until then, stay safe .