R&C: What do you consider to be the main challenges financial institutions (FIs) face on the regulatory front? How have obligations and requirements changed in recent years?

Johns: The rapidly-changing set of cross-jurisdictional regulations placed on FIs is putting immense pressure on them to keep pace. Though many of these regulations have their roots in the financial crisis, other external events – an increase in cyber crime, the emergence of Big Data, the rise of FinTech, Brexit and open banking – reflect more recent regulatory concerns. Posing major challenges, risk management practices have struggled to keep up with this rapid transformation. For example, consider the significant increase in capital under Basel IV; compliance requires real-time calculations that must be based on complete, accurate and timely data. The sector must also respond to increasing concerns about money laundering with recent guidance from the Financial Action Task Force (FATF) on improving global anti-money laundering (AML) and combating the financing of terrorism (CFT) compliance. As a final point, consider the legal implications of data storage – one of the most all-encompassing challenges of regulatory compliance. The uncertainty of future regulatory changes is a big reason FIs are facing a daunting time.

Van Straten: In the past few years alone, the sector has seen a growing volume of regulatory requirements, some triggered by the global financial crisis and others based on dynamic and fast-moving challenges, such as cyber security and, more recently, personal data protection. This is not about simply neutralising threats; it is also a matter of customer data privacy. This new world order has introduced a fresh set of fundamental truths that FIs need to bear in mind – transparency and accountability and also the fundamental change that sees companies no longer being the owner of the data of people they keep on their IT systems but the people themselves being the owner.

Jan-Mar 2019 Issue

SAI Global