According to research conducted by The Economist Intelligence Unit and sponsored by Mazars, most financial firms surveyed said that they are raising their standards of ethical conduct beyond new legal requirements. The same study also highlights how digital technologies are proving instrumental in achieving transparency and cyber-security.
The findings of the EIU research, which gauges the way financial services companies are responding to new regulations as well as the surge in digitalisation in the sector, have been incorporated in a report entitled ‘Digital finance: meeting ethics and compliance in financial services’, published by Mazars, the integrated and independent international organisation specialising in audit, accountancy, tax, legal and consulting services.
The study was originally commissioned by Mazars as part of its global initiative, Business. For Good, which encourages business leaders to adopt ethical behaviour and a socially responsible approach to business. Its main objective was to shed light on the two main concerns voiced by the firm’s financial services clients: regulatory changes following the 2007/2008 financial crisis and the potential offered by digital innovation.
Digital technologies can help financial companies improve services
Among the main conclusions of this exercise, one finds that three-quarters of the financial services companies surveyed said they rely either extensively or moderately on data analytics and cybersecurity technologies to raise their standard of ethical conduct. Moreover, 80 per cent of financial services executives report having improved their company’s brand image as a result of setting and maintaining higher ethical and/or transparency standards, while 51 per cent said that their financial results had also improved. At the same time, however, less than 50 per cent of financial firms surveyed say that they have introduced new internal codes of conduct or business procedures to foster ethics-oriented corporate cultures.
Other conclusions of the study are that for nearly half of the respondents, the volume and scope of regulation constitute the greatest cause of operational concerns, and that the regulatory aspects which preoccupy these firms most relate to the safe storage and handling of data (58 per cent). In addition, 75 per cent of the companies surveyed are concerned with the rising incidence of cyber-security breaches affecting financial services companies and their customers. A large majority (87 per cent) said that outsourcing data analytics to third-party providers could create potential ethical or compliance problems for their own companies.
Commenting on the report and its findings, Mazars Malta partner Alan Craig said: “Digital technologies can help financial companies improve their services, manage risks better and improve their ethical conduct. The fundamental challenge for these firms – and this emerges clearly in the report – remains that of adapting internal or business procedures to respond to the availability of these new tools.”