RULES OF THE TRADE

The Ever-Changing Regulatory Environment in Finance

RULES OF THE TRADE

The Ever-Changing Regulatory Environment in Finance

terena-bell

Christophe Djaouani

Christophe Djaouani is an executive and international strategist specializing in communication and localization for regulated industries. Prior to this, he joined SDL in 2018 with the acquisition of Donnelley Language Solutions, where his teams provided multilingual communication solutions to the finance, investor relations, legal, and life sciences industries.

terena-bell

Christophe Djaouani

Christophe Djaouani is an executive and international strategist specializing in communication and localization for regulated industries. Prior to this, he joined SDL in 2018 with the acquisition of Donnelley Language Solutions, where his teams provided multilingual communication solutions to the finance, investor relations, legal, and life sciences industries.

In the last two editions of Rules of the Trade, I commented on the role of language service providers (LSPs) in supporting the goals and objectives of the clinical trials industry and the healthcare sector. This time, I will focus on something almost as personal to individuals as their health and wellbeing: their finances.

I mentioned in my first column how important it is for us in the language industry to listen to our customers, to understand what keeps them up at night, and to focus on retaining them, and developing our relationship with them. I could just as easily have been talking about the role of financial services providers in the lives of their customers.

At both a personal financial level and with corporate finance models, the key to profitability for providers lies in maximizing the lifetime value of their customers. To do this, they must maintain a consistently excellent level of service, develop mutually beneficial relationships based on trust, and continually innovate to stay ahead of their competition with meaningful, value-added differentiators – sound familiar?

Perhaps the single most important divergence from these similarities is the role of regulators. I’m sure that we in the language industry are all very relieved that we don’t have the level of scrutiny on us that most financial services providers have on them – and yet we live it and breathe it every day through our work with finance firms. We feel their pain, we share their content challenges, and we find solutions together to the expectations placed on them by watchdogs at both a local and international level.

“…LSPs have a critical role to play in improving access to content such that whole communities are not marginalized by their language skills.”

The current regulatory landscape

The current regulatory landscape

Reflecting the surge in pandemic-related projects that I highlighted when I covered both the clinical trial and healthcare sectors, the regulatory landscape in finance has undeniably been impacted by COVID too. In particular, we are witnessing a broadening of horizons for investors in our work with asset management firms, specifically around Environment, Social, and Governance principles (ESG).

Sustainability has become a core consideration as both retail and institutional investors focus on financially rewarding investments that are driven by companies focusing on environmentally-friendly manufacturing processes, renewable energy and products that support biodiversity or reduce our reliance on natural resources.

However, since COVID, these principles have been joined by an increase in reporting in the other areas of ESG. Suddenly, the social impact of corporate activities on the workforce and supply chains is the center of attention, along with increased analysis of how companies reflect society in terms of diversity and inclusion.

ESG is certainly the hot topic in finance right now and is set to stay that way for a while yet.  The EU’s Taxonomy Regulation, which has realized the practical requirement of the Sustainable Finance Disclosure Regulation (SFDR), is likely to be the start of a global alignment of regulations in this area.  In the US, we are seeing a resurgence of support for sustainable investing driven by the Biden administration, and manifested in an increasing expectation of regulation from the likes of the Securities and Exchange Commission (SEC).  In Asia, a number of countries are asserting their leadership in ESG, with an increasing rivalry over who will emerge as the green finance capital of the region. This interest is being driven largely by younger investors who are perhaps more sensitive to the long-term impacts of global issues like climate change, workforce exploitation, and gender, race, and sexual equality.

All of this attention is driving an increased demand for content, and such is the global nature of the industry that the demand for localization of this content is increasing rapidly.

Growth aspirations driving new corporate business

Growth aspirations driving new corporate business

We are also witnessing a growth in confidence in investment banking and capital markets activity. In addition to ongoing regulatory activity, like the years-long transition from the LIBOR global rate-setting benchmark, there has also been an unprecedented increase in mergers and acquisitions (M&A) activity and initial public offerings (IPOs) as confidence returns to markets. Companies are betting big on a rapid post-pandemic economic recovery, backing their belief with a wave of large transactions from which banks, law firms, and other advisors benefit.

The content generated by these deals is immense; moreover, the complex, cross-border nature of these transactions is a highly profitable source of translation work, particularly where an LSP can demonstrate the highest standards of security and confidentiality as well as the subject matter expertise so critical to these projects.

The importance of customer experience

The importance of customer experience

The final, but perhaps most important, consequence of the pandemic has been the resurgence in attention given to the experience of users and consumers. Companies across multiple industries have been compelled to accelerate their digital initiatives and this has been particularly apparent in financial services.

Where previously a sub-optimal online customer experience could be papered-over with solid face-to-face or telephone customer service, now it is not so easily disguised. Many financial services providers have found themselves falling behind the leaders and disruptors in their market and have needed to respond with a rapid pivot to the digital sphere,, utilizing web, mobile, and social channels across international markets.

Not only has this driven an increase in the need for culturally nuanced translations, but also a noticeable uptick in language technology adoption, for instance in the use of machine translation to support multilingual content for chatbots and virtual assistants.

The other area of customer experience that has grown in importance, and rightly so, is the challenge of accessibility. It is now commonly understood that an individual might not be disadvantaged simply by physical impairments or mental health conditions but also by their language proficiency. Language barriers when one travels give a high-level insight into that hindrance – imagine then what that might feel like in everyday situations where simple but critical needs like access to healthcare or financial products are a major challenge.

The language limitation, along with a better understanding of physical or mental health impairments, is receiving increased attention in the provision of services to individuals.  Much more needs to be done in this area though, and LSPs have a critical role to play in improving access to content such that whole communities are not marginalized by their language skills.

A final word on security

A final word on security

The challenge in all of these areas has been exacerbated by the increasing security threat from malicious third parties, as well as internal risks from either careless or unscrupulous employees. Fully appreciating the content risk and, better still, building security into the fabric of your content creation, translation, and delivery workflows is the appropriate mitigation to this challenge.

It is not getting any easier – nefarious players have quickly taken advantage of the chaos caused by COVID to create opportunities for fraud and deception.  Financial services providers are at the sharp end of this threat and must surround themselves with skilled vendors for whom security is just as much of a concern as it is to the firm itself.

“It is now commonly understood that an individual might not be disadvantaged simply by physical impairments or mental health conditions but also by their language proficiency. Language barriers when one travels give a high-level insight into that hindrance – imagine then what that might feel like in everyday situations where simple but critical needs like access to healthcare or financial products are a major challenge. ”

Business as usual as a way of life

Business as usual as a way of life

With all of these regulatory and compliance challenges, the objective must be to embrace the spirit of the rules. Enabling an internal environment that doesn’t panic when a new regulation or guideline is announced but that systematically addresses the challenge within an overall culture of compliance may seem like a lofty goal. Nevertheless, that is exactly the journey that forward-thinking organizations are on as they seek to compete in a new world of consumer and regulatory expectation.

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