To succeed in this environment banks will need to address a series of challenges.
- Banks will need to meet the current and prospective regulatory requirements of capital, liquidity and recovery and resolution planning (RRP).
- Those organisations caught in the headlights of Basel 3 implementation many miss the wider picture as it potentially transforms into a Basel 4.
- Regulatory requirements will force major structural change, including the split of global entities into a patchwork of small locally or separately regulated subsidiaries.
- The regulatory bar has been raised in terms of what conduct risk means to a bank and how it is a core part of the strategy.
- This change must also be accompanied by a shift in culture through tone from the top, policies, hiring practices, incentive structure and embedding values.
- Data management is also fundamental – banks need to hold the right data to get close to customers, they have to meet increasing regulatory demands for reporting and disclosures and need to respond to supervisory concerns that banks do not have the right data.
- Banks will also need to significantly upgrade governance risk management processes.