Technology to the rescue

Many of the issues that beleaguer conduct risk monitoring and management come down to sub-optimal data collection and analytics. But new solutions may finally be coming to market that overcome the key hurdles.

Some of the fundamental problems in non-financial risk management stem from the volume and variety of the underlying data, the siloed nature of bank operations across businesses and regions and the difficulty in building quantitative metrics to predict problems, rather than simply using data forensically to investigate issues once they have arisen. Finally, however, new technologies are being introduced that provide practical solutions to these problems across many key areas including surveillance, algorithmic trading and the science of misconduct.

As well as being a solution, technology can sometimes be part of the problem. Age-old categories of financial misconduct, from price manipulation to insider dealing and improper order handling, can all be done easily with simple technology such as Excel or a Twitter account. Keeping on top of the changing tools in trading rooms is getting harder and harder.

Over and above the misuse of relatively simple, human-directed technology, banks also have to confront the possibilities raised by increasingly intelligent and autonomous systems. Even linear algorithms may seem simple to control but their interactions ‘in the wild’ are not necessarily predictable. As for next-generation AI and machine-learning systems, these by definition behave in ways that cannot be anticipated simply by looking at the initial code or rule sets. The use of technology to monitor technology is another headache for the three lines.

For the time being though, most misconduct originates from us – the humans in the interactions. While detecting what we have done after the fact is important, more and more banks are looking at ways to prevent misconduct through more detailed behavioural analytics. Solving the problems of what data to collect and what metrics to use is another key area of technology development.

We take an in-depth look at all these subjects in the following pages.

John Baskott

Welcome to 1LoD's Global Benchmarking Survey and Annual Report 2019, the largest and most comprehensive survey ever conducted on the front office control sector. This year's report was answered by over 30 of the world’s largest financial institutions. We hope you enjoy reading the findings and thank you to everyone who contributed to making it a success. To find out more about upcoming events, our careers hub or other content from 1LoD just visit

John Baskott, Co-Founder, 1LoD

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