Global Trade Spend Increase
As was reported recently, the Trans Pacific Partnership (TPP) is now dead. What does it mean for the supply chain? It means, if you are a US business with some business operations overseas, expect increased supplier spend. You may need to offset new law that will come into place by diversifying the risk with local suppliers for non critical operations.
Less Taxation, More Jobs?
There is talk of increased repatriation of multinational funds sitting in foreign markets. As much as $2.6T is stashed abroad and they have been there for a while (current 35% tax not an incentive to move it). It is estimated that savings will occur for corporations due to less taxes for repatriating cash back into the US. As time will tell what rate foreign profits repatriation will be (currently expected to be in the region of 10% – 15%), investments and M&A will continue to flourish especially in near shore tech centers like the UK
Dodd Frank has been in the news recently. In an effort, to combat the Volker rule, which prohibits using customer deposits for riskier investing, it will not only allow more autonomy in investing, but it will also lift the capital requirements before a government bank intervention. This will enable more capitalistic synergies to flow through the system – especially benefitting community banks.
KYC, AML and Vendor Compliance
In alignment with Dodd Frank, expect rules to be relaxed. Agency consolidation will occur. When compared to the streamlined UK (FCA), the US has quite a number of regulatory agencies (CFPB, FINRA, OCC, FDIC) and their role – compliance mostly in their various sometimes overlapping functions. Expect less reporting requirements. The goal will be to spur more innovative projects in banks, their use of technology and immediate opportunities to impact main street..
Does that mean you need to lay off staff? Probably not. But you will probably not need an entire team of 20 working solely on KYC and compliance documentation for 8 areas of operational risk. Some of those areas will condense dramatically due to international impacts like protectionist policies. This is where technology and more automation may help.