Operational Resilience: The Future of Financial Services

The financial services industry is facing unprecedented challenges in 2022. From traditional compliance issues to emerging risks such as crypto and AI, the landscape is evolving rapidly. In this article, we’ll explore the top priorities for financial institutions, from operational resilience to data-led supervision.

Culture and Conduct: A Persistent Challenge

Culture and conduct remain a major concern for regulators and industry professionals alike. The 2007-2009 global financial crisis highlighted the importance of a strong company culture and values. However, developing an effective framework that is based on principles rather than rules continues to be a challenge.

Financial institutions must prioritize culture and conduct to ensure long-term success.
Developing an effective framework requires a shift from rule-based compliance to principle-based behavior.

Financial Crimes Compliance: A Growing Concern

The financial crimes compliance landscape is changing rapidly, with new regulations and technologies emerging. The US and EU are introducing new initiatives to combat money laundering and terrorist financing.

Financial institutions must adapt quickly to these changes while maintaining their focus on business-as-usual responsibilities.
Effective financial crimes compliance requires a deep understanding of regulatory requirements and the ability to implement robust controls.

Data-Led Supervision: The Future of Regulation

Regulators are increasingly using data analysis to shape their supervisory approach. This shift towards data-led supervision requires financial institutions to pay closer attention to the data they provide and improve their own data analysis capabilities.

Compliance departments must interpret regulatory sensitivity and identify potential outliers or anomalies.
Effective data analysis is critical for detecting and preventing financial crimes, as well as identifying areas for improvement in compliance processes.

Innovation and Cost Reduction: A Balancing Act

Compliance departments are being asked to do more with less, while launching new products and dealing with new regulatory requirements. Technology has been used to support compliance efforts for decades, but there is still significant opportunity for innovation.

Financial institutions must balance the need for cost reduction with the importance of effective compliance.
Effective innovation requires a deep understanding of both regulatory requirements and business needs.

The People Agenda: A War for Talent

Compliance functions are competing in a highly competitive war for talent. To attract and retain top talent, financial institutions must offer competitive benefits, articulate career potential, expand recruitment geographies and experiences, and focus on the employee experience.

Compliance departments must prioritize employee development and engagement to remain competitive.
Effective compliance requires not only technical knowledge of laws and regulations but also strong interpersonal skills and collaboration.

Conclusion: The Future of Financial Services

The financial services industry is at a critical juncture. From operational resilience to data-led supervision, innovation and cost reduction, and the people agenda, there are many challenges ahead. However, by prioritizing culture and conduct, adapting to new regulations and technologies, improving data analysis capabilities, and competing for talent, financial institutions can build a strong foundation for long-term success.

Key Takeaways

Culture and conduct remain a persistent challenge for financial institutions.
Financial crimes compliance is becoming increasingly complex with new regulations and technologies emerging.
Data-led supervision requires financial institutions to improve their data analysis capabilities.
Innovation and cost reduction are essential for compliance departments, but balancing these demands can be challenging.
The people agenda is critical, with compliance functions competing in a highly competitive war for talent.