While a significant level of client migration happened ahead of the first no-deal deadline on 29 March, it was by no means completed.
Key activities banks are currently focused on include:
- Continued engagement with clients and delivering migrations on request
- Completion of onboarding for in-scope clients
- Maintenance of client reference data set up in the EU27 entities for clients that have deferred migrations
- Completing documentation of the cross-border control framework
- No-deal Brexit contingency planning
Specific considerations being reviewed as part of these key activities:
1. Client population
- Establish client data refresh processes, and where possible identify automation opportunities, so that the client data population remains up to date without the need for regular management
- Build automated reports for distribution, so that in-scope client lists are easily accessible
2. Management Information (MI)
- Aggregate all data inputs used to produce MI into a centralised data base for automated reporting
- Automate a central view of client readiness and completion of setup requirements, so that client requests to migrate can be dealt with on demand
3. Client outreach
- Prioritize clients who are requesting to migrate
- Re-engage all other clients to reconfirm their migration intentions
- Maintain clear audit trail of all clients engagement and migration decisions
4. Client reference data
- Establish client reference data maintenance process for clients set up in the EU27 entities
- Complete remaining in-flight data set up activities, and address any remaining issues that require remediation
- Analyse thematic issues around client data quality, governance and architecture and lessons for future client outreach programmes (e.g., Interbank Offered Rate [IBOR], uncleared margin)
- Establish process to manage KYC profiles for clients who have deferred migration and have also had their KYC profiles grandfathered in the EU27
- Consider the additional operational costs and risks created as a result of dual entity maintenance of KYC profiles
- Complete onboarding for all remaining clients in the programme pipeline, so that clients are ready to migrate should they request to do so
- Assess the operational cost of dual entity onboarding and establish cut over date for mobilising (if deemed operationally feasible)
- Analyse opportunities to enhance client onboarding process efficiency
7. Cross-border controls
- Complete documentation of the cross-border controls for Brexit, enabling:
- Transition to BAU owners
- Reactivation closer to the Brexit date
- Delivery of any remaining cross-border controls prior to Brexit
- Update the cut over and communication plans in preparation for the Brexit deadline
- Review wider cross-border control framework and any enhancements based on lessons from Brexit
8. National regimes
- Build a control framework that incorporates a national regime flag, so that multiple scenarios of local rule variations can be dealt with in the framework
- Ensure ongoing monitoring of developments in national temporary and permanent permission regimes, so that these can be reflected in the control design
- Ensure monitoring of the local requirements and the impact on the business (e.g., conduct or reporting requirements)
Beyond Brexit: Future EU27 Strategy
Faced with increasingly dispersed client relationships, it is critical for banks to have a strong basis to manage, govern and control these clients going forward. As such, there are a number of key considerations for banks as they build out their EU27 centric client strategies.
1. Migrating clients: maintaining and growing the client base in the EU27
- How will new product and service launches be managed across locations?
- How will the bank consistently manage client relationships and interaction, across both front and back office, split across multiple jurisdictions?
- How will the bank maintain tight control of their client cost base (i.e., cross regional view of client revenue and costs)?
- Are regional staff sufficiently trained on local regulatory requirements, as well as tax impacts, that clients may now be subject to as a result on being contracted in the EU27 entities?
2. Non-migrating clients: establishing a robust cross-border control framework
- Are reverse solicitation controls clear and understood by the front-line teams? Is further training required?
- Have product controls been tested? (i.e., lifecycle events?)
- How will the bank ensure cross-border controls and procedures are Brexit compliant should there be an extended transition period and regular changes to national regimes?
3. New to bank clients: future client strategy and onboarding operating model
- What is the client strategy for the EU27 entities? Will target clients differ to those traditionally prioritized from London?
- What governance will be in place to approve new clients requesting to be dual onboarded into the EU27 entities and London?
- How does dual onboarding impact the onboarding model and associated operating cost?