Until negotiations have been finalized, we can’t know the degree to which Brexit will affect the IT sector within the UK’s financial services industry. However, organizations are already preparing for the potential scenarios that could arise and, in the face of uncertainty, are planning for every eventuality. Many businesses will follow through with their Brexit plans regardless of the political outcome because they need to ensure stability and continuity of service for their customers. While there are lots of issues to be considered, our work at Cutover is concerned with supporting businesses across a few key areas, including software and infrastructure transitions, regulation and audit and change management planning and execution.
UK vs. EU Banking Regulations
The UK’s “passporting” rights are those by which UK financial services firms are currently able to sell their services across the EU. If these rights are lost completely after Brexit, UK financial firms - or foreign financial firms with bases in the UK - will no longer be able to operate these services to the EU out of the UK. They would instead need to establish subsidiaries within the EU. This will require a huge number of technical and operational changes to set up operations in new geographies, migrate people and data and comply with various regulatory bodies.
With the prime minister stating that she will not try to keep the UK as a member of the single market after Brexit, it is likely that this will be the case. However, with hope for regulatory equivalence, a situation in which the EU would acknowledge a UK regulatory regime as good as its own, UK-based financial firms could be allowed to continue operating as they do now in Europe.
It’s likely that, whatever the outcome of negotiations, there will be a need for UK financial services institutions to comply with new and perhaps increasing EU regulations, in order to continue conducting business across the European Union. It is important for businesses to consider the impact of Brexit on corporate reporting, audit and compliance needs, to ensure that they will continue to accommodate changing regulatory requirements.
Technology Change Management
Managing change associated with the usual running of financial institutions can already be complex, costly and risk-laden. Brexit may mean that financial services organizations also need to consider issues such as location upheavals and talent challenges; for instance, dependence on key individuals who could be lost as a result of Brexit poses a serious risk. The changing geography of teams will require thought around how scattered people can best remain joined up and able to collaborate.
Data migration is also a top priority for IT decision-makers; if data is stored in regions where companies aren’t able to adhere to compliance regulations, cloud migration could be a key consideration too.
Whatever the post-Brexit scenario, managing existing activities alongside additional Brexit-related changes will require a huge effort, meticulous planning, and seamless execution.
It is important for businesses to have good visibility across all of this change activity so that they are able to gain insight to inform their strategy and planning decisions. Being able to visualize and efficiently manage huge volumes of activity helps to reduce risk across critical events, as well as facilitating the gathering of business intelligence for continuous improvement.
Technology Change Capacity
With not enough hours in the day as it is, the consequences of Brexit may add to the strain by requiring additional large-scale projects or events. It’s important to consider how best to streamline processes in order to free up as much time as possible for other projects. For work that requires human effort, finding ways to support, orchestrate and streamline the activity between people and the technology they use plays a vital role in efficiency.
Automating manual tasks also helps to free up time, providing the opportunity for employees to become involved in more valuable or necessary work.
Final thoughts
Regardless of the final deal, Brexit will mean a lot of technological change and new regulations to comply with. With all the various issues that need consideration, the organizations planning ahead now will be best-placed to handle any immediate risks resulting from Brexit, as well as being prepared to get the best of arising opportunities in the longer term.
Over the last few years, Cutover has proven itself to be a best-in-class platform for strategic change planning and execution. Having successfully orchestrated major transformations and data migrations, structural reform programs and ring-fencing initiatives, as well as supporting reporting for CCAR attestation, the platform has demonstrated its power to assist with the complex mass of change that Brexit will inevitably engender.
Request a demo to find out how you can use Cutover to support your post-Brexit strategy.