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BASEL III – Friend or Foe?

BASEL III – Friend or Foe?

BASEL III focuses on two main aspects to manage risk:  Capital and Liquidity.  The scope of this initiative forces a comprehensive examination of assets, systems and procedures.

As a result the process of assessing readiness for BASEL III will likely magnify underlying complexity that exists in the infrastructure of the financial institution.  The process of complying with a request for information will likely heighten the lack of centralized system reporting, for example, that exists and therefore causes greater risk inherently to an organization.  As a result BASEL III, not unlike its predecessors of SEPA, PSD2, Dodd-Frank, and yes the original BASEL accord, may have the unintentional benefit of bringing visibility to the complicated underlying infrastructure that presents much risk inherently.  

Whether this regulation will be leveraged for the purpose of updating a financial institution’s systems infrastructure remains to be seen.  Certainly BASEL III opens the door to leverage consolidated payments data while improving liquidity management.  This project gives focus to the concept of big payment data and how to capitalize on the data that a bank owns within its walls.  Once again regulation is pushing us.  Perhaps this time regulation can bring the side benefit of a start to renovation and rationalization.