Financial regulation has changed significantly in the ten years since the global financial crisis. Tougher, more detailed and more complex standards now apply to all aspects of regulation. KPMG’s analysis, Regulation 2030, examines how financial regulation might develop over the next ten years.
Sevdalina Dimova, Director, Audit, KPMG in Bulgaria, comments on the findings оf Regulation 2030: “Over the next ten years financial regulation will move into fintech, cyber security, anti-money laundering, retail and wholesale conduct, and potentially a raft of areas driven by social objectives such as climate change and financial inclusion. The financial institutions will need to keep a close eye on the regulatory developments and find ways to adapt their strategy to a new reality.”
KPMG’s new paper focuses on four key questions:
- Will regulation push on, or be pushed back?
Regulation is more likely to push on than be pushed back. Recalibration is unlikely to make a significant difference, while the relentless march of new regulation will continue. There may however be some shifts in regulatory approach and a greater fragmentation of regulation across countries.
- What will be the regulatory response to Fintech?
Fintech developments will have an increasing impact on the financial sector, and will bring not only benefits and opportunities but also risks to regulated firms, financial stability and consumers. These risks will generate a regulatory response in the form of new principles, rules and guidelines. In turn, regulation will constrain and shape the impact of fintech on the financial sector.
- Will regulation be used increasingly to deliver social objectives?
Social and political pressures may grow for regulation to be used more actively to promote the achievement of social objectives. Indeed, to some extent this is already happening, for example through the lenient capital requirement treatment of exposures to domestic sovereign risk in local currency, and (at least in Europe) of the funding of SMEs.
- What questions does this raise for society to address?
The final question opens up a wider debate: some of the issues here are very much for society as a whole to address, not just regulators, since they are central to how financial services should evolve over the next ten years. These wider issues need to be debated and resolved.
Read Regulation 2030 to find out more.