Global Regulatory Network

In Banking and capital markets

Our Global Regulatory Network, consisting of former regulators and bankers from the Americas, Asia and Europe, provides strategic insights on financial regulation that helps clients adapt to the changing regulatory landscape.

What EY can do for you

Regulators globally are shifting their attention from post-crisis reforms in banking and capital markets to new emerging risks and priorities. With the industry facing a wide range of disruptive elements, supervisory and policy agendas are firmly in review mode. Questions are arising about the use and ownership of data, boundaries of regulation, and geopolitical issues impacting market conditions for growth and investment.

The industry is responding to these challenges by introducing new talent, processes and technologies to strengthen risk management and compliance, while improving customer experience. Regulation is transforming too, as firms and regulators integrate new technologies and greater data usage into monitoring processes, business models, regulatory reporting and oversight.

The Global Regulatory Network (GRN) helps our clients to understand and adapt to these challenges.

For 2019, the GRN has identified four focus areas:

  1. Reform structures and develop new processes: Fundamental structural regulatory reform measures are largely in place. The challenge is to make recovery and resolution work and make sure that financial institutions meet expectations for operational continuity. Legacy issues that were carried forward into the new landscape – many of which are linked to operational resilience and business continuity – remain a focus.

    The shift from interbank offered rates (IBORs) to alternative reference rates (ARRs) is a material part of global benchmark reform. Although this is a very specific technical development, it will impact all aspects of a bank’s operations. The transition will be a significant effort for firms with extensive exposure to IBOR-linked products and contracts.
  2. Enhance governance and operational resilience: Digital transformation has brought many issues into sharper focus, such as the increasing threat of cyber-attacks, internal challenges of replacing legacy IT systems and supporting staff, inconsistent risk measures and inability to aggregate data. New technologies and products are testing the effectiveness of existing processes. Meanwhile, firms need to strengthen operational resilience, improve stress-testing standards, review impact tolerances and refine performance metrics.

    Having a robust third-party risk management framework for outsourcing and vendor services is more essential than ever. Front-office staff must be trained on risk, with compliance officers advising and supporting the control function in the front line. Regulators will expect firms to position operational resilience squarely as a boardroom priority, alongside financial resilience.
  3. Manage and protect data: Banking is a data-reliant industry. While banks require timely, accurate and meaningful data, customers expect user-friendly communication tools. On the other hand, investors and the wider market require greater access and transparency. In light of this, banks will have to better manage data and contend with stringent demands for data privacy. Significant investment has already been made in storage and accessibility. Now, it is time for banks to focus more on data architecture, analytical capabilities, and development of an integrated data privacy framework with full risk management disciplines.
  4. Address drivers of misconduct: Initiatives to improve industry culture and ethics can go so far but will have limited impact without a framework for accountability. The challenge for the conduct agenda is to move from setting the “tone from the top” to embedding positive culture and behavior throughout the organization.

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