CNBC - Getting Ready for the GCC Summit in Doha

Get the CNBC Interview on the GCC and Shariah Banking

Middle Eastern markets are facing some of it's most pressing challenges. Market failure and a new breed of more complex products are challenging the principles of Shariah although the market has fared relatively well and is growing by 15-20% each year. Complinet continues to play a pivotal role in helping to shape opinions and share perspectives throughout the GCC region by working with regulators and firms throughout the Gulf. Our summit takes place next week in Doha where we'll be debating topics such as re-benchmarking local regulatory skills, using more sophisticated AML approaches to solve new challenges and understanding how the region will compete as a global financial center as new reforms begin to take hold. Read More!

Waking the Sleeping Dragon

I picked up my visa today from the Consulate of the People of China. Our Middle and Far East country manager, Leas Bachatene and I are on a tour in February with a couple of our business partners, Deloitte in Hong Kong and Singapore and then off to meet with our new reseller, Tide in Beijing.

Complinet provides risk and compliance information around the world and what I am beginning to realize more than anything else is that the notion of a global financial village or a fully connected commercial entity is largely superficial. It is not that the fundamental banking practices and even techniques are wildly different, and certainly the profit motive is

extremely potent in every region but it is the regulatory culture and perhaps even the ethical drivers that I am interested in.

Where the west has largely unbridled capitalism with more product complexity, astounding booms and the inevitable busts propped up by teams of regulators desperately attempting to strike the right balance between reform and recovery, the Middle East maintains a strong faith based system where the principles of Shari'ah remain deeply embedded in the investor psyche. This is not at a commercial level but more at a religious one.

In effect the absence of ethics is supplanted with a deeper and even more meaningful purpose.

Now contrast that with China (not including it's western-model banking enclave - Hong Kong) and you get some sense of how this 'command culture' begins to struggle with rigid ideas and a relatively new commercialism that challenges our old view that somehow Communism, or Socialism directly correlate with a stagnant, non-competitive and unsophisticated financial system - The truth is very different.

So, for Complinet's customers, spanning 81 countries we see that local content, while critical does not substitute an authentic understanding of the cultural nuances in those regions in which they operate. To help our clients, Complinet's global reach is growing constantly with offices open in the Middle and Far East and I am excited in how we are beginning to work with local regulators to help form markets (such as the GCC) and create greater cohesion around the world.

We collaborate with a committed set of clients, and there are some truly incredible opportunities but as a provider of information technology you must beware not to arrive with any preconceived notions. Spend a lot of time listening to the market and embrace those cultural differences - they make the world of compliance a colorful place to operate in.

Read More!

Next generation - User generated

An interesting debate is taking place at Complinet regarding the value of user generated content (UGC). The principle is that our subscribers evolve from passive readers to active participants and that collectively they build a base of high value information that is profiled, shared and rated in the community. Of course we're all increasingly familiar with the concepts of UGC. For most of us this is the restaurant reviews and hotel feedback we get on various sites that use that real customer insight to add legitimacy to a paid for review. In expert networks such as Complinet's, this would involve risk and compliance professionals across the globe commenting on proposed rule changes or regulatory developments in the consultation period.

The issue with expert networks is how well controlled this content is. On the one hand there is a general acceptance that this is not sterile editorial commentary but raw market insight, and so what you may lose in structure you gain in color. Complinet is a fascinating company in that it is highly innovative but all the while is dealing with critical industry information that must be well defined, categorized and delivered with diligence and incredible accuracy - clients demand this..

So it's a compromise for sure but on balance there is a lot that can be gained by having our clients become more active. I like this idea a lot and with the right caveats this layer of subject matter can provide a very real and authentic sense of how the community is 'feeling' about a topic.

The debate continues but Complinet, as always, leads the way by carefully considering the options, working with clients and the latest technology on how to 'trend' topics, build wiki type taxonomies that are dynamic and a community of risk and compliance professionals around the world with a common goal to avoid regulatory failure and to assist for the greater good of the industry. Read More!

Bullseye! Preparing for an Arrow visit

It's interesting hearing from parties outside of the financial services markets that they perceive little has changed. In fact there is an overriding concern that we'll be back in the next financial crisis within 5 years (according to a survey on the forgotten crisis conducted by Complinet recently).

The story from our customers, who work in compliance for some of the world's most demanding financial services institutions, is quite different. What we're hearing is that the FSA in the UK in particular are carrying out their Arrow visits with more tenacity and a few surprises along the way.

Stories of short time lines and little notice before a visit begins and traders being nabbed on the shop floor and being asked who their designated compliance lead is and so on have firms wondering just how painful this proctological exam is going to be.

I suppose this difference between the perception that regulators are not really working any harder to prevent further transgressions and the reality that firms are biting hard as they prepare for what's coming (and in some cases what has come), lies at the heart of the PR challenge the financial markets now face.

In a lot of ways, financial markets still need to attract investment and that can sometimes be at odds with an overly burdensome regulatory market. However investors need to feel protected and consumers must regain confidence in the system if it is to recover in a sustainable way.

I remember failing my first driving test not because I didn't look in the rear view mirror before pulling out of the parking area outside of the examination center but because I didn't make it clear to my examiner that I had done so. It's not what you do that matters, it's what you are seen to do. And so the FSA must understand that there will be a need to communicate in an effective way, the changes they have made so that firms at least get some public recognition for putting in place the many new steps to avoid further transgressions.

We're putting together a webcast on preparing for a new type of Arrow visit. Keep checking our website, oh and keep looking in that rear view mirror. Read More!