Innovation: The fourth line of defence

This study examines the impact of risk management and compliance practices on the financial performance and corporate reputation of financial institutions in Indonesia. Utilizing a quantitative approach, data were collected from 160 financial institutions through a structured questionnaire and analyzed using Structural Equation Modeling-Partial Least Squares (SEM-PLS 3). The results indicate that both risk management and compliance practices significantly enhance financial performance and corporate reputation. Specifically, risk management practices have a stronger positive impact on both outcomes compared to compliance practices. These findings underscore the necessity for financial institutions to integrate comprehensive risk management and compliance strategies into their operations to achieve financial stability and bolster their reputation. The study provides valuable insights for practitioners and policymakers, highlighting the critical role of these practices in fostering long-term sustainability and success in the financial industry.

The role of professional organizations in risk management is not a new concept. Many have been around for 50 or more years meeting the specialized needs of their members. What is new is the increasingly important role these organizations are now playing in assisting in the ongoing personal education of financial professionals and the development of the global regulatory environment within the financial services industry. This article explores the rationale behind the proliferation of professional organizations in the field of financial risk management, their historical role, what financial risk‐management professionals expect from these organizations, what the organizations can be reasonably expected to deliver, and the future role of professional risk‐management organizations of which the rapidly growing global discipline of financial risk management is a part. Two basic issues need to be addressed before dealing with the expectations for and the delivery of products and services from a professional risk‐management association. These issues present somewhat of a “chicken‐and‐egg” problem. The first involves defining financial risk management, and the second relates to simply being able to define the organization's role in attempting to realistically meet the expectations of an increasingly broad number of varied constituencies in which probably the most dynamic discipline is the financial services industry.

SUMMARY Over the past decade, a series of malpractice incidents in the financial services industry have shown that the risk of misconduct is not a theoretical possibility. Accordingly, the promotion and implementation of new ethics, values, and behaviours in banks and other financial institutions are primary objectives on the international regulatory agenda. Recent cases of mis-selling of financial products widened the scope of discussion towards financial firms’ sales practices. In particular, the widespread use of cross-selling techniques in the financial services industry caught regulatory attention, above all, among the European Supervisory Authorities. The ensuing debate was underpinned by the crucial question of how to guarantee a sustainable use of cross-selling by banks and financial institutions. This article addresses this question by analysing cross-selling in relation to the specificities and risks posed by the financial services industry. Whilst it was possible to elaborate on regulatory solutions in relation to a distorted use of financial practices, such as securitization and interest rate benchmarks, now it is also desirable to discuss the optimal strategy to prevent cross-selling from being the ‘tool’ for financial misconduct. This is of significance given the recognized potential of misconduct cases to pose systemic threats to financial stability.

The role of professional organizations in risk management is not a new concept. Many have been around for 50 or more years meeting the specialized needs of their members. What is new is the increasingly important role these organizations are now playing in assisting in the ongoing personal education of financial professionals and the development of the global regulatory environment within the financial services industry. This article explores the rationale behind the proliferation of professional organizations in the field of financial risk management, their historical role, what financial risk‐management professionals expect from these organizations, what the organizations can be reasonably expected to deliver, and the future role of professional risk‐management organizations of which the rapidly growing global discipline of financial risk management is a part. Two basic issues need to be addressed before dealing with the expectations for and the delivery of products and services from a professional risk‐management association. These issues present somewhat of a “chicken‐and‐egg” problem. The first involves defining financial risk management, and the second relates to simply being able to define the organization's role in attempting to realistically meet the expectations of an increasingly broad number of varied constituencies in which probably the most dynamic discipline is the financial services industry.

With the increasing aging population, it has had a profound impact on the financial services industry and economy. This study aims to explore the effect of population aging on the financial service industry and economy and propose corresponding countermeasures and suggestions. The aging population has brought challenges to the financial services industry. The increase in the elderly population has led to a rise in demand for financial products and services. Financial institutions innovate and develop financial products and services that meet the needs of older people. At the same time, the financial literacy of older people is relatively low, and financial institutions need to strengthen financial education and improve their financial knowledge level. Secondly, the aging population has had multiple economic impacts, with decreased labor supply and increased elderly care expenses putting pressure on economic growth. Financial institutions must pay attention to this trend, adjust loan policies, and support the development of emerging industries to promote sustainable economic growth. In addition, the change in the consumption needs of older adults has also brought new opportunities to the economy. Financial institutions can meet the consumption needs of older people and promote economic development through innovative products and services.

Interim Report: Risk Management Maturity in Large Australian Superannuation Funds

How to Avoid another Derivative Crisis: Risk management for emerging markets

A revolutionary turning point in the financial services industry has been reached with the introduction of Central Bank Digital Currency (CBDC). This research proposes an adaptable Consumer-Centric Management Model (CCMM) designed for the distinct financial environment of Coimbatore District, with the potential to transform digital transactions and consumer interaction. The model uses insights from customer experiences and preferences, with a focus on consumer protection, privacy, and security. To collect both quantitative and qualitative data for the study, a mixed-method approach is employed, which involves conducting stakeholder interviews and surveys. The Coimbatore District's financial institutions, central banks, and regulatory bodies can incorporate CBDC in a way that puts the interests of their customers first by following the guidelines provided by the CCMM. It covers stakeholder cooperation, risk management, consumer awareness, and regulatory compliance.

This literature review research paper examines the application of AI and machine learning in the financial industry and its effects on risk management and fraud detection. The study conducts a comprehensive search of academic and industry sources and identifies key findings and trends related to the use of these technologies in the financial industry. The literature review finds that AI-based systems have been shown to improve the efficiency and effectiveness of fraud detection by analysing vast amounts of data in real-time and identifying patterns and anomalies that may indicate potential fraud (KPMG, 2018). Additionally, machine learning algorithms can be trained to adapt and improve over time, making the detection process even more accurate. Furthermore, AI-based systems have also been shown to improve risk management in the financial industry (Deloitte, 2019). However, it is important to note that while AI and machine learning have the potential to significantly improve risk management and fraud detection in the financial industry, they are not without limitations and potential biases (Bolton and Hand, 2002; Bose, 2018). Therefore, financial institutions should carefully consider the implementation and use of these technologies and ensure proper governance and controls are in place. This literature review provides a comprehensive understanding of the current state of AI and machine learning in the financial industry, its benefits and challenges, and future possibilities. Keywords: AI, Machine Learning, Financial Industry, Risk Management, Fraud Detection, Governance, Ethical Implications

This paper highlights the functions performed by the financial services industry in the clean development mechanism (CDM) of the Kyoto Protocol. The CDM enables industrialised economies to meet their emission reduction targets while supporting environmental projects in developing economies. Since the Copenhagen Summit did not give a satisfying response to the future prospects of the carbon market, reliance has increasingly been placed on private actors in order to keep developing the carbon market architecture. Financial institutions are involved in the CDM market as pooling and transferring economic resources in order to develop CDM projects; they can also enhance market liquidity while trading carbon certificates. The financial services industry is active in the CDM market, providing evidence of the necessity to encompass private institutions in the efforts to tackle climate change. This paper shows the benefits of financial intermediation in the CDM market and also explains some shortcomings.

The mutual structure of various financial institutions has changed internationally, especially during the late 1980s and early 1990s. Various explanations have been offered. Some commentators argue the mutual organisational form has become redundant, others consider structural changes in the financial services industry as the main reason for organisational changes. In the United Kingdom the stronger emphasis on profitability had a profound impact on the decision to demutualise many building societies. In the USA the failure of mutual savings and loan associations resulted in demutualisation as a rescue strategy. This paper will explore the specific circumstances in South Africa of the changes in the mutual organisational form of building societies and insurance companies. The mutual form of organisation has a long history in South Africa. This paper will explore the reasons for the early choice of mutuality and the recent forces leading to the demutualisation of companies in order to list as public entities on stock exchanges, both in South Africa and abroad. South Africa experienced varying degrees of international isolation and sanctions, but, in the financial services industry, a strong international connection was sustained. The South African experience will be considered against the international changes in the financial services industry as well as the regulatory changes in South Africa. The paper will explain the peculiar South African conditions as the context for the organisational changes in South African mutual.

This case study details how and why integrating storytelling, empathy, and inclusive practice shifted QSuper, a large Australian finance organisation, from minimal awareness to moral awareness then moral capability in the delivery of services to Indigenous customers. During the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry, QSuper were recognised for their exemplary service with Indigenous customers (Hayne, Interim report: Royal commission into misconduct in the banking, superannuation and financial services industry, Volume 1. Commonwealth of Australia, 2018; Transcript of Proceedings, 13 August, Commonwealth of Australia, 2018). This position was in stark contrast to the inaccessible service offerings of other financial organisations where some used predatory practices to sell unethical financial products to Indigenous Australians (Hayne, Interim report: Royal commission into misconduct in the banking, superannuation and financial services industry, Volume 1. Commonwealth of Australia, 2018; Hayne, Final report: Royal commission into misconduct in the banking, superannuation and financial services industry, Volume 1. Commonwealth of Australia, 2019a). Storytelling garned from visiting customers in remote communities and other meaningful activities involving inclusive practice to facilitate ethical decision-making in finance is different to standard functionalist finance approaches (Schinckus, Int Rev Financ Anal 40:103–106, 2015). Two empathetic questions asked within QSuper complementing the storytelling, were: “What is the right thing to do by the customer?” and “How would I feel if this were my mother?” Exploration into the lived reality of moral capacity is important based on the Commission finding many of the 490,000 finance staff do not know how to provide ethical services to vulnerable customers, in particular remote Indigenous customers (Australian Bureau of Statistics. Labour force, Australia, detailed. ABS. Retrieved from https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia-detailed/latest-release, 2021; Hayne, Final report: Royal commission into misconduct in the banking, superannuation and financial services industry, Volume 1. Commonwealth of Australia, 2019a). Furthermore, there is minimal literature on the role of Indigenous storytelling to heighten moral awareness in the finance industry which was found to lead to better ethical outcomes.

Recent management accounting (MA) studies demonstrate the need for multi-dimensional performance, specially non-financial performance (NFP) measures. Contemporary academics and practitioners have also demonstrated that measuring/managing NFP in service organisations is more challenging than in manufacturing organisations. However, not a single study of the role of MA in measuring corporate social responsibility (CSR) in the financial services industry (FSI) has yet been reported, although CSR is an important element of NFP. This study attempts to investigate the role of MA in measuring CSR in various financial institutions in Finland, Sweden and Japan. The results of this study reveal that the management of the studied organisation put more emphasis on financial performance measurement and comparatively less on NFP measurement. CSR is considered important in some banks, but MA plays a relatively small role in the measurement of these elements. The empirical findings of this study point to areas for future research.

The financial services industry has undergone a profound transformation through the strategic implementation of big data analytics, creating unprecedented opportunities for innovation and competitive differentiation. This comprehensive article examines the technological infrastructure supporting analytics in financial institutions, including data integration systems, machine learning frameworks, real-time processing platforms, cloud infrastructure, and natural language processing applications. The article explores five critical domains where analytics has demonstrated significant impact: customer analytics for personalization and retention; risk management for credit, market, and operational risk assessment; fraud detection through real-time monitoring and network analysis; algorithmic trading for strategy optimization and market sentiment analysis; and regulatory compliance through automated reporting and anti-money laundering systems. Despite measurable benefits, financial institutions continue to navigate substantial implementation challenges, including data quality issues, privacy concerns, infrastructure limitations, talent shortages, and ethical considerations in algorithmic decision-making. The article presents structured implementation methodologies for overcoming these obstacles, offering organizational readiness frameworks, data governance strategies, analytics maturity models, and practical roadmaps that financial institutions can adapt to their specific contexts. This article contributes both theoretical understanding and practical guidance for financial services organizations seeking to maximize value from their data assets while navigating the complex regulatory landscape and rapidly evolving technological ecosystem.

Artificial intelligence has fundamentally transformed decision-making across the financial services industry. By integrating machine learning with human expertise, financial institutions now leverage AI systems to conduct real-time risk assessment, detect and prevent fraud, optimize investment portfolios, and provide enhanced decision support to professionals. These AI-augmented approaches enable faster analysis of transaction data, more accurate identification of patterns and anomalies, improved forecasting capabilities, and data-driven investment strategies. While delivering significant advantages in operational efficiency, credit risk management, fraud prevention, and investment performance, the industry still faces challenges related to regulatory compliance, model transparency, and data privacy. Looking forward, explainable AI, federated learning, natural language processing, and quantum computing represent promising directions for further advancing financial decision-making capabilities