Needless to say, I am talking about client data, which is the basic commodity of this fourth industrial revolution. Importantly, client data is currently controlled by banks, though some recent developments, such as the PSD2 in the EU, might alter this situation. Accordingly, institutions should strive to make the best out of their current dominant position. Banks should be capable of extracting, exploiting and analysing their customers’ data. Management must fully consider this information to take decisions. Otherwise, reevaluation and transformation of the business model will not be possible. Therefore, a clear conclusion would be that the business criticality of IT and cyber resilience has also soared, compared to the situation 20 years ago. This makes the investments and controls in this area a key element of the future. Let me refer briefly to business conduct. The crisis has reminded us, rather painfully, that conduct is another key factor to consider in any sustainable business model. I would like to point out that conduct change is the only means of responding to the challenge the sector faces to restore its image and reputation. Society has changed in terms of its demands of the financial sector, including also higher standards for AML-CFT. The rules governing customer-bank relations have likewise changed. Banks should, therefore, move to respond to the new social and regulatory reality. It is worth recalling that a very positive consequence of this policy is that it increases legal certainty, significantly reducing potential litigation costs. In many cases, implementing these policies involves a top-down cultural change.
The banks we allow to access our markets need to meet the high standards we expect and be capable of being effectively supervised. What does responsible openness mean? Sam Woods set out the three pillars of responsible openness in 2019 (and, also built upon this in his Mansion House speech3 last November). 1. First that we should engage strongly in international standard-setting processes and make sure that we are at the forefront of implementing those rules in a thorough way; 2. Second that we adopt practices and structures which promote strong collaboration with colleagues in other jurisdictions; and 3. Third, that we are open to hosting cross-border business in the UK – but only if it is resilient and appropriately controlled and governed, and if we have sufficient visibility of and influence over the necessary supervisory outcomes. My policy colleagues take the lead on our work in international standard setting. As we have reinforced many times now4, we have absolutely no intention of weakening prudential regulation in the UK. The changes that we introduced post 2008, have stood the banking sector in very good stead, for example in enabling it to withstand the stresses posed by the Covid pandemic in 2020. This statement sets out our expectations on the second and third of these pillars.