The Big Conversations in Financial Services Regulation Right Now
A healthy Finance and Banking ecosystem requires regulation – but the regulatory frameworks underpinning that system need to be built on balance.
In 2026, when so many aspects of our financial system are rapidly changing with technological advances, it’s time to ask – are regulators’ priorities currently appropriately balanced? How could they better support and protect the Financial Services industry to encourage innovation?
These are complex questions to answer, not least because so many financial institutions now operate internationally.
With business happening in multiple countries, organizations are having to balance separate, divergent, sometimes contradictory sets of rules and regulations.
It would be beneficial to the global Finance community to see an international effort to harmonize and unify Financial Services regulators, of course allowing for divergence where necessary to unique local circumstances.
A key pillar of any effort to move towards that kind of interconnected and equivalent world of regulations would need to be simplification.
Uncoordinated and overlapping requirements are a huge headache for financial institutions and are of no benefit to regulators.
Having simple, robust measures to prevent Money Laundering and other forms of Financial Crime benefits everyone – firms, consumers and the wider economy. But current regulations can be ineffective –
Another possible route to improved and unified regulations would be a focus on outcomes instead of procedures.
We’ve already seen this shift in the highly-regulated UK, with the FCA’s introduction of Consumer Duty – a framework that looks primarily at customer outcomes to assess fairness.
We hope that other regulators will take inspiration from this, reducing the burden on individual business functions while continuing to protect customers and respond to unfair practices.
It was encouraging to see Federal Reserve Vice Chair of Supervision last week discussing the Fed’s goal of bringing capital requirements more in line with measurable financial risks, with the end goal of encouraging more mortgage lending.
Modernization is likely to be a key topic of discussion in the regulatory and compliance spaces this year. Technological advances are causing a period of rapid change in the sector, potentially one that is even more revolutionary than the introduction of online banking and apps in the previous decades.
We can all agree that regulations are something vital to the health of an efficient and robust Financial Services ecosystem.
A regulatory outlook with innovation and advancement at its core can be positive for everyone.
