FSRA is very pleased to announce the membership for six new Stakeholder Advisory Committees (SACs) that will provide input and advice to FSRA’s Board of Directors and help shape the future of financial regulation in Ontario. There was a strong response to the call for applications, with 265 submissions received from a broad cross-section of applicants from each sector. Many thanks to all our applicants for participating in this important initiative; your input and perspectives will continue to be highly valued as we continue our work together. The new SACs are another example of how FSRA is committed to openness, transparency and collaboration with stakeholders, and considering a broad range of perspectives when making strategic decisions.
PRMIA Montreal hosted the 7th Annual Canadian Risk Forum. Senior risk professionals, industry experts, and scholars shared their thought leadership insight on Risk Management: Trending Practices Versus Practical Trends. Sohail Farooq, CEO, BankingBook Analytics; Lois Tullo, CRO and CCO, Novera Capital/Global Risk Institute were joined by David Latour, VP, Risk Management, CDPQ to jointly present recently concluded research on cyber risk quantification.
Google’s new checking account service could help banks in their battle for consumer deposits. The technology giant said last week it’s exploring how it can partner with banks to offer checking accounts through its Google Pay app. Citigroup Inc. and a California credit union signed on as initial partners for the effort -- a move that could help them pick up extra customers as the industry contends with slowing growth in deposits. “It’s a war for deposits,” Betsy Graseck, an analyst at Morgan Stanley, said in a note to clients Friday. “An opportunity to deliver value to corporate customers and pick up incremental checking accounts as well is a good business decision.” Deposit growth at the biggest U.S. banks slowed to 2.2% last year, the lowest level since 2010, according to data compiled by Bloomberg Intelligence. Consumers have increasingly flocked to newer, digital-only banks that come with flashy mobile apps and often offer higher interest rates for their savings. Citigroup has been making a push for consumer deposits after it debuted its national digital bank and restructured its U.S. consumer operations last year, bringing Anand Selva from the firm’s Asia business to lead the new unit. Average deposits in the firm’s U.S. retail banking arm have climbed 2.9% this year to $186 billion. With the Google partnership, Selva is leaning on a playbook he learned in Asia, where Citigroup has forged partnerships with consumer companies including Paytm, India’s largest payments platform, and Grab, the ride-hailing app in Southeast Asia.
Today the Office of the Superintendent of Financial Institutions (OSFI) set the Domestic Stability Buffer (DSB) at 2.25% of total risk-weighted assets, effective April 30, 2020. This reflects OSFI’s view that key vulnerabilities to Canada’s Domestic Systemically Important Banks (D-SIBs) remain elevated, and in some cases show signs of increasing. The key vulnerabilities include Canadian household indebtedness, asset imbalances and institutional indebtedness. In addition, global vulnerabilities related to ongoing trade tensions and rising leverage are growing, which could increase the chance of a spillover of external risks into the Canadian financial system. Against a backdrop of accommodative low interest rates and stable economic conditions, it is prudent to build additional resilience against potential shocks to the financial system. An effective capital regime ensures that banks are holding adequate capital to protect against risks to the financial system, while also encouraging them to use their buffers during times of stress to avoid asset-sales or drastic reductions in lending. This announcement is consistent with recent statements from the Financial Stability Board, which caution that “given rising global vulnerabilities, authorities should continue to assess whether existing buffers are adequate to support resilience, taking into account their domestic conditions and cyclical position.” OSFI remains committed to increasing the understanding of the purpose of the DSB to support banks’ use of this capital buffer in times of stress.
BankingBook Analytics and Global Risk Institute presented Distribution Analysis of Information Risk (DAIR) at MMF Symposium 2020, titled, The World Forum on Finance, Technology, Investment & Risk Management. The symposium was held at Blue Mountain Resort. In his address, Luis Seco, Director, MMF emphasized the importance of innovation. He noted that innovation was the lifeblood of the economy and the main objective of leading universities. Startups, companies born out of an idea, toil, creative financing and sweat, were increasingly dominant players in the financial sector. MMF Symposium also addressed the advances in financial innovation paying special attention to the startups that were shaping our immediate future. BankingBook and Global Risk Institute were represented by CEO, Sohail Farooq MQF, MSc, MBA and COO, David Gong, MMF, CFA and Executive-in-Residence, Lois Tullo, ICD.D, MBA, CPA, respectively. The team presented Distribution Analysis of Information Risk - a joint BankingBook and Global Risk Institute's research project which focuses on cyber risk quantification. This was followed by a demonstration of BankingBook's proprietary DAIR application, its functionalities and key risk metric and insurance outputs. Our team also reviewed the key challenges in developing a cyber risk control framework and its integration with organizational risk appetite; the application of DAIR in cyber quantification and integration with risk reporting.