Build resiliency and organizational agility
Some banks have struggled to implement change, leading to recurring regulatory issues and challenges in competing with non-traditional players, such as FinTechs. In response, many banks need to become more agile, with strong governance and change management capabilities to enable real organizational, technological and cultural change, in a way that increases a firm’s competitiveness while still aligning with regulators’ expectations. Regulators in Hong Kong, Malaysia and Singapore are encouraging banks as they become more innovative by launching FinTech initiatives.
One approach is risk management by design (RMBD), which entails identifying risks and building in regulatory and compliance obligations as part of the development process for new products and services. Critically, RMBD also entails building in guardrails, ensuring that data governance is in place to capture the right information at the right time, and incorporating the ongoing testing and monitoring of controls, so that firms can assess compliance performance over time.
As we work through the pandemic, society has greater needs and greater expectations from the financial services industry. At the same time, firms must operate in a far more complex environment, due to evolving technology, global fragmentation, environmental challenges and other factors. Tech firms and other non-traditional players pose new forms competition. And the industry must become more resilient and agile, even as disruptive threats grow. Regulation will drive some of these changes but also respond to others.
In the current operating environment, banks need to find clarity in terms of policy and regulatory shifts, so they can effectively compete in the current environment while also planning for the future.