Regulation in Banking and Payment Industry - Thematic Research

Regulation in Banking and Payment Industry - Thematic Research

Summary

This report explores the impact of regulation in the banking and payments industry, covering topics such as data privacy, open banking, fair treatment, anti-money laundering, Know Your Customer, and technology.

Financial services providers carry a heavy compliance burden. It is not unusual for 50% of all spend by incumbent banks to be regulatory-driven. The pandemic has increased that cost further. The next big regulatory challenge is the blurring of industry lines. As non-banks diversify into banking and banks diversify out, there is no single regulatory body to regulate across sectors. This creates regulatory loopholes or arbitrage opportunities across sectors while exacerbating those that already exist.

As such, having the experience and judgement to anticipate what is the true spirit of the current regime - as well as where regulators are likely to be prescriptive going forward - can help steer banks towards more sustainable business models.

Scope

• Regtech investment more than doubled from 2017 to 2018, and has continued to grow at pace since.
• The scale and pace of technology change, and the diversity of sources from which it can now emanate, make fintech partnerships more important than ever to ensure external innovation can be delivered to existing customers through the structures and processes of the bank, which presents heightened data privacy risks.
• Compliance challenges often center on data management. The challenges here bring banks back to longstanding big data issues around handling the requisite volume, velocity, variety, and veracity of data coming into the enterprise.

• Identify key regulatory focus areas in banking.
• Understand key gridlines of change in regulation from a technology, market, and consumer angle.
• Understand investment flows and M&A activity for regtech.
• Understand which individual firms are best placed to win and lose amid regulatory change.