Assignment Sample on MMN326566-21-A Bank Operational Risk Management

Introduction

Digital information provides a potential improvement in technical efficacy with regulation, innovation within the banking sector. Digital technology can put pressure on competitors’ margins that leading to higher risk management in the business. Financial regulation, innovation, and technology can detect the new threat for the business to gain competitiveness in the market. In this study, the effectiveness of regulation, innovation, and technology can positively impact global financial institutions. Starling Bank faces lower interest rates, low credit, and increased regulation within the sector. The study is going to evaluate the risk management function that has faced by the bank in the UK market. The technology efficacy is going to cover in this study to understand the core concept of financial regulation and innovation in global financial institutions.

Financial regulation and innovation on the state of global financial institution

Financial regulation and innovation can influence the financial services that lead to increased competition within the current global financial sector. Financial regulation can reduce market failure and increase competitiveness in the market. Therefore, it helps to promote macroeconomic stability in the business. As cited by Zetzsche et al. (2017), after the financial crises, financial regulation can help to increase the financial stability in a financial institution. However, regulations can help to increase market transparency and safeguard shareholders. These aims and goals of the business can be achieved by preventing market failure. The financial regulation entails a number of costs on controlling the business in the economy. In the period 2015 “EU Payment Services Directive II” is a regulating act where Starling bank can open access to the customer so that they can freely access the social media platform in the economy (Romānova et al. 2018). The entire nation can freely access digital transactions and businesses can generate a higher income. The major aims and objectives of adopting financial innovative technology are to make an online payment service that is safer and more convenient for users. Therefore, the client can see their accounts, can deposit their money, and track their transaction through online services.

Financial innovation can help the banking companies and encourage them to open APIs and assist banks in acquiring or collaborating with financial technology companies in the market. As per the view of Lewis et al. (2017), a major goal and objective are to increase the innovation efficacy in the market to increase technical knowledge and help to grow in a competitive market. It can influence the global state of the banking sector where different regions can open access to the user through digitalization.  The other banking sector can review the payment services and also borrow from other resources. The banking sector can fundraise from the other resources to increase their market value with the help of financial innovation. As per the view of Chiu (2017), the business can invest and trade in other from to increase their market size and share value in the stock market with this act. Therefore, through digitalization, the business can also face a positive side by using this in their business strategy. The financial regulation can increase their market share value in the market where the business can increase the technical knowledge and skills in the banking sector.

The market shape can also be increased through financial regulation and innovation technology in the banking sector. As per the view of Goddard (2017), “General Data Protection Regulation” can also be increased profitability where financial technology is implemented in the business. As cited by Gomber et al. (2018), financial regulation can control the user’s data and track their transaction through the social media platform. Financial regulation and innovation technology in the banking sector can help the customer to track transactions and identify the data information about the customer. Financial technology brings an effective platform for the business and customers can freely open access to a smart device to track a customer’s information control in the market.

Technological efficacy

The use of financial technology has a positive impact on the business that leads to decreased financial costs in the business. As per the view of Alam (2021), the payment services, advising financial statements can be increased the technological efficacy in the business. Starling Bank provides technological efficacy in different ways:

Technological efficacy can evaluate the prospective lending more efficiently that is based on statistical models and a big sample size.  Financial technology can increase the branch network in the banking sector. Starling bank charges higher rates, low-risk borrowers, and price-sensitive, time-sensitive. This can increase financial inclusion for developing countries within the sector. As cited by Dang et al. (2019), financial technology enables businesses to innovate at a faster rate than traditional businesses. Cloud technology is the other source of efficiency in the business. (Starlingbank.com, 2021), Starling Banks have adopted cloud technology to increase the market value in the competitive business. The business can protect the information and identity in the business to increase the market share. The designing system also can benefit from cloud computing in the Starling Bank. The Bank provides the best solution for the users to increase the online transaction and keep the tract to be secure in the business.

Evaluation of risk management

Starling Bank offers a mobile-based bank to the user where the customer can freely access the transaction freely. The company provides a digital risk for the cyber smart in the market to reduce the risks in the business. The two new partners are included in the business to expand the business strategy in the market and prevent risks in a market base. Certain issues can be faced by the company by implementing financial technology in the business. An increase in financial regulations can decrease the profitability of the business in the market. As cited by Tursoy (2018), it creates downward pressure for the business to earn a high range of profit from the market. As a result, an increase in competitiveness and risks in the banking sector the financial regulation can boost the financial institution’s regulatory requirements. Therefore, it can lead to an increase in market shape for the business effectively. Moreover, there can be a self-sustaining expansion in shadow banking activities outside of the legal framework.

Digital risks are a good risk management function for Starling Bank to provide a good solution for insurance that achieves the major goals and objectives. Digital risks can offer a better solution for legal protection and cyber security in the business. The digital risk can cover the public security management to reduce cyber risks in the business. Therefore, it can be stated that the risk management of Starling Bank can decrease the risks in the business strategy. The business can protect the customer information and transaction with the help of these digital risks and the business can cope with the market crises (Starlingbank.com, 2021). There are other partners where Starling Bank has 65000 business account holders who can be able to obtain customer accounts to keep the information safe in the market base.

The business can offer the best subscription plan for the users so that the customer can be freely subscribed and track their transactions in the market. The customer can adjust their transactions and also deposit their money in the business. The business was able to promote a starling app for the customer where the customer can freely access the app with a better plan in the business (Starlingbank.com, 2021). The policy dates and transaction dates can be tracked with the help of this app. The customer can use this app for their betterment in the business to track their transaction id and other aspects, therefore, it can be stated that financial technology is essential for the banking sector and also for the customer to develop the sector in an economy. The nation can gain knowledge by accessing the digital risks in the business and getting the best solution in insurance from the bank. The other risk management system is cyber smart where the company can find the digital weakness within less than 60 seconds. The risk can be reduced with the help of this cyber smart in the business. Therefore, cyber smart can be beneficial for the customer to meet essential certifications for the business in the competitive market. These risk management functions for Starling Bank are essential to reduce the risks that they faced in the market base.

Conclusion

It has been concluded that Starling Bank with digitalization in the market is beneficial for the business and customer as well. The technical efficacy can be increased by implementing financial innovation technology in the business. The study has been covered the financial regulation act and innovative technology that are effective for the banking sector in the competitive market. Two regulation acts have been covered and discussed in this study to understand the core concept of financial regulation and technology. The technical efficacy and risk management function have also been discussed in this study. Digital risks and Cyber Smart are major risk management functions for Starling Bank to reduce the risks in the market to cope.

Reference

Alam, T., 2021. Cloud Computing and its role in the Information Technology. IAIC Transactions on Sustainable Digital Innovation (ITSDI), 1, pp.108-115.

Chiu, I.H., 2017. A new era in fintech payment innovations? A perspective from the institutions and regulation of payment systems. Law, Innovation and Technology, 9(2), pp.190-234.

Dang, L.M., Piran, M., Han, D., Min, K. and Moon, H., 2019. A survey on internet of things and cloud computing for healthcare. Electronics, 8(7), p.768.

Goddard, M., 2017. The EU General Data Protection Regulation (GDPR): European regulation that has a global impact. International Journal of Market Research, 59(6), pp.703-705.

Gomber, P., Kauffman, R.J., Parker, C. and Weber, B.W., 2018. On the fintech revolution: Interpreting the forces of innovation, disruption, and transformation in financial services. Journal of management information systems, 35(1), pp.220-265.

Lewis, R., McPartland, J. and Ranjan, R., 2017. Blockchain and financial market innovation. Economic Perspectives, 41(7), pp.1-17.

Romānova, I., Grima, S., Spiteri, J. and Kudinska, M., 2018. The payment services directive 2 and competitiveness: the perspective of European Fintech companies. European Research Studies Journal, 21(2), pp.5-24.

Tursoy, T., 2018. Risk management process in banking industry, vol-190, pp-167.

Zetzsche, D.A., Buckley, R.P., Barberis, J.N. and Arner, D.W., 2017. Regulating a revolution: From regulatory sandboxes to smart regulation. Fordham J. Corp. & Fin. L., 23, p.31.

Websites

Starlingbank.com, 2021, Cloud technology has impacted on the business. Available at: https://www.starlingbank.com/about/awards/ [Accessed on – 21.12.2021]

Starlingbank.com, 2021, Risk management function of Starling Bank. Available at:https://www.starlingbank.com/news/digital-risks-cybersmart-marketplace-launch/ [Accessed on – 21.12.2021]