Financial Services (FS) is a highly important sector for Oxial. Some of our first clients were FS companies, we currently work with FS firms all over the world and it’s a sector in which we are highly experienced in and knowledgeable about.
FS has become more heavily regulated than ever, both at a local and global level, and there is also more risk facing the sector than there has been previously. This means that FS firms must be ever more vigilant about managing and mitigating risk, and must deploy the right GRC tools to help with this and to ensure they remain compliant.
This applies to FS firms irrespective of location, but it is true that banks and FS providers in Europe, the US and south-east Asia are more experienced and used to managing risk. They have more resources, staff and access to the latest GRC software solutions. But that doesn’t mean that FS firms in other parts of the world can ignore risk management and compliance requirements.
Looking at Morocco – the place of Oxial’s first non-European office – and a country in which FS is thriving more than most others in Africa, we examine how prepared the sector is for managing and mitigating risk.
The Moroccan banking industry
The banks in Morocco are some of the biggest in all of Africa and are hugely dominant in the Moroccan market. The seven largest banks in Morocco account for 90% of the accounts of total sector deposits and 82.3% of industry assets.
It’s a sector that is gradually being modernised and Moroccan banks are also beginning to expand their reach in Africa and in other parts of the world. This expansion has not always been completely smooth nor without risk, but it is starting to pay off. Attijariwafa Bank now generates approximately one-third of its revenues from outside Morocco, while international revenues at Banque Centrale Populairegrew 800% between 2009 and 2017.
Banks are also expanding into new services. In 2017, BTI Bank launched a new Islamic banking offering, providing access to Sharia-compliant products and services. This has been an almost unqualified success, not only boosting financial inclusion among previously unbanked citizens and growing to encompass more than 100 branches, but also opening up new markets for BTI Bank.
Balancing expansion with risk
Such expansion offers significant growth opportunities for Moroccan banks, but a strategy like this also comes with increased risk. This means that FS providers also require the right enterprise risk management software to protect themselves and mitigate that risk as they grow.
Acquisition and expansion can put pressure on a bank’s reserves, while in West Africa where much expansion is taking place, there are some countries that are politically less stable than others. Because of the language and culture and historically links, France is a natural European market for expansion. But the 2018 introduction of GDPR has meant another layer of regulatory compliance to manage. Any Moroccan FS firms that hold data on EU citizens must comply with GDPR and the penalties for non-compliance can mean some of the biggest fines the industry has seen.
A Fitch rating from earlier in 2019, warned against the risks it claimed were looming on Moroccan banks. These included low capitalization, weak asset quality and a higher ratio of impaired loans.The Moroccan central bank refuted this, stating that it had efficient and effective regulatory control of the banking sector, contrary to what Fitch suggested.Fitch is a respected international credit rating agencyhowever, and its warnings cannot be completely dismissed.
The need for smart risk management
There are undoubted opportunities for Moroccan FS expansion and growth, but even if one doesn’t agree with the Fitch rating it is clear that the sector still has a strong need to manage and mitigate risk more effectively as it moves forward.
To do so requires the right GRC software solution. It needn’t be the most expensive GRC tool on the market, but it does need to be one that fits the needs and overall objectives of that particular organisation. Oxial has recently launched its new sGRC solutions – the sGRC Express and sGRC Suite – that take GRC functionality to a new level.
We have integrated technology and innovation, along with knowledge, governance and processes, culture and capabilities to create a solution that mitigates risk in a highly effective way and guarantees compliance with any and all regulatory requirements. Because our partners , our customers have access to some of the most knowledgeable consultants in North Africa, with a deep understanding of Moroccan FS but also the wider world.
As Moroccan FS firms expand their reach, enter new markets and offer new products and services, it stands to reason that the risks will grow too. But with the right GRC software solution those risks can be mitigated highly effectively.
If you are a Moroccan FS firm that wants help in managing and mitigating risk, then please get in touch with one of Moroccan FS experts here.
