Many US financial institutions are probably feeling good about the way they’ve prepared for Brexit. Early on, when they saw the types of changes that Brexit could bring, they began to build plans to adapt. Many have done great work acting on their plans, but even so it might not be enough.
Brexit negotiations will be complex. Everyone knows that they’ll have to update their plans, but they may not be ready for updates like these. The fact is that Brexit is going to bring a steady flow of changes—big, small, occasionally contradictory—and firms may need to react in a hurry to risks and opportunities. Here are some things to keep in mind.
While you may not literally create a Chief Brexit Officer, you should look closely at how you make decisions in your organization. Existing Brexit plans were developed to react to a nonbinding referendum and an unclear timetable for negotiations. For months, companies haven’t had much new information. Now organizations have more certainty on the process, but there’s a lot they still don’t know about outcomes and timelines.
Article 50 triggers a two-year period of negotiations between the UK and the EU. The UK government has committed to providing as much certainty as possible for businesses. However, once negotiations begin in earnest, companies may not be able to process everything that happens in real-time. If your firm has any kind of business in the region, you may want to rethink the process you use to watch the changes and adjust.
Brexit aside, the political situation in the EU is very fluid. Several major EU elections are coming up, and polls indicate growing instability, which won't help the financial markets. Even if you operate only in one domicile, you should pay attention to potential changes in EU policy or structure. It’s possible that the EU could make changes that may have wider implications across the region.
To create their original Brexit plans, firms received buy-in from the executive team, regulators, internal boards, and possibly even shareholders. Firms should be asking themselves how long they’ll need to get the next round of Brexit changes through those parties, and whether there’s any way to speed up the process. Additionally, during the negotiations, US firms should work closely with UK and other European regulators so they can quickly update their Brexit plans as changes arise.
With Article 50 behind us, we can expect shifts in the variables that you may have used in formulating your strategy. Your firm should create a path to get the approvals you need as quickly as possible. To put it simply, by the time you plan, get buy-in, and execute a strategy for one change, several more changes will be waiting. It’s time to discuss what this path needs to look like before negotiations ramp up. You may not be able to affect the cadence of change, but you can be ready with mechanics in place to adjust swiftly.
As your firm deals with all of these changes, stay close to your customers. Decisions you make now may not be in line with what your customers want, even if they seem to make strategic sense. Customers generally focus on continuity and eliminating uncertainty could be crucial.
If your clients are changing how they think about buying services, your institution needs to keep up with that changing perspective. Be sure to keep customers at the center of your Brexit planning. For example, having open communication with your customers on their needs and taking in feedback from your front office about what customers are saying should provide important input into your planning and risk management process.
Even the best Brexit plans should be reviewed frequently. Focus on getting the fundamentals right: get the access to the data you need, review your options for legal structure and operating model, and prepare a communication plan that works. Take this time to recalibrate, and regularly, before the time pressure kicks in. This may make the difference between taking advantage of Brexit’s opportunities and being blown about by its challenges.