The regulatory authorities remain focused on enhancing the resiliency and resolvability of the global systemically important banks, and have plans for additional action in the coming year. To date, increased capital, liquidity, and leverage requirements, coupled with stress testing and capital planning mandates, have added significantly to the industry’s operating costs, hurting revenue. New regulatory reporting requirements, resolution and recovery planning, and stricter supervisory oversight are also consuming vast amounts of the industry’s time and resources. With stronger consumer protection measures and new restrictions on trading and equity investment under the Volcker Rule now firmly in place, additional revenue opportunities may prove hard to come by in the future, although firms continue to look for greater efficiency and to fund new technology.
The Evolving Banking Regulation in the Americas is now in its fifth year, attesting to the intensity and complexity of the post-crisis regulatory environment, and while many of the mandated reforms are now known, further changes to the agenda are still underway as the financial crisis continues to cast a long shadow over the financial services industry.
Transforming the industry’s regulatory compliance initiatives will require strong leadership from the top and the active participation of every single employee of the firm. Regulatory compliance programs must become sustainable. KPMG believes that four core areas must be addressed: strategic and structural change; conduct and culture; data and reporting aggregation; and risk and governance.