Greetings, and welcome to our third issue of The Custodian for 2020. I hope everyone is keeping well and in good spirits. We are several months into the global COVID-19 pandemic now and there is no telling if, and when, life will ever go back to the way we knew it. In the face of all the uncertainty, my hope is that we can all establish a new rhythm to our days, both at work and at home.
As an industry, not only have we proved to be resilient in the face of such massive disruption, we have been adaptive too. This has been amply demonstrated in how we are managing due diligence, an area that has been profoundly impacted by the pandemic.
Pre-COVID, it was de rigueur for network managers to get on a plane to visit their agent banks and conduct a physical due diligence on-site at the agent bank’s premises. When lockdowns and global travel restrictions came into effect, physical due diligence quickly became a thing of the past.
But business has to go on, and our industry must adapt and work out how due diligence can be satisfactorily conducted under such constraints, without compromising the underlying risk management objectives.
While the debate continues, risks need to be managed and mitigated. Due diligence still needs to be undertaken, and agent banks still need to be assessed and appointed. The future of due diligence is highly topical for our industry, as reflected by the amount of discussion generated at The Network Forum’s annual summer event held virtually a couple of months ago.
In this issue of The Custodian, we pick up the thread and discuss the future of due diligence. We look at how it might evolve in the wake of COVID-19, examining different perspectives through the lens of various industry players.
We also share our experience in Africa where the speedy adoption of virtual due diligence in place of on-site agent bank monitoring has met with considerable success.
There’s no doubt about it – the age-old way of conducting due diligence is changing, precipitated by COVID-19. For us at the coalface, it is very exciting – and a huge responsibility – to be able to help shape and influence its future course through engagement with our clients, industry bodies and regulators.
We look forward to hearing your views via the interactive polls embedded in this due diligence edition of The Custodian – do participate and join the discussion!
Margaret Harwood-Jones Co-head, Financing & Securities Services Financial Markets
