Regulatory Pressure Index | KPMG | BE

Regulatory Pressure Index

Regulatory Pressure Index

Even if the pace of new regulatory initiatives has clearly diminished, the full reality of earlier reforms is only just becoming apparent

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Since our last study in 2013, regulatory reform has clearly moved from the design to the implementation stage. This is not to say that all the details are in place, but in most areas there is now at least a clear direction. For some of the banks this has been a difficult time, as they struggle not only with regulatory but also with economic pressures (see Section 3). The journey to date has perhaps focused too much on meeting the immediate regulatory requirements. 

Following only the path of strict compliance does not represent a strategy for a viable and sustainable future. Banks must look beyond simply meeting regulatory requirements if they want to achieve satisfactory ROE. This requires a strategic focus on their customers, business model and risk appetite, operational and funding structure, IT systems and data management. This is also evidenced by the growing supervisory interest in business model analysis with concerns about its viability and sustainability. Even if the pace of new regulatory initiatives has clearly diminished, the full reality of earlier reforms is only just becoming apparent. This is shown in our KPMG regulatory pressure index for 2015.

The detail of regulatory reforms is beginning to become clearer, as is the direction path of the remaining reforms. The volume of unfinished business is diminishing as more regulations are moving through the design and calibration stages to implementation (Figure 6) and fewer regulatory reform initiatives remain at an early development stage. Meanwhile, banks continue to struggle with the complexity of keeping track of and adjusting to sheer volume of measures and the multiple interactions between them. 

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