Displaying search results for ""

Key Regulatory Bodies in the Banking Industry: Their Roles and Responsibilities

Key Regulatory Bodies in the Banking Industry: Their Roles and Responsibilities

The banking industry faces a complex and ever-changing regulatory landscape shaped by technological advancements, global interconnectedness, and evolving customer expectations. Banks must proactively address these regulatory challenges by investing in robust risk management systems, cybersecurity measures, and compliance frameworks and embracing innovative solutions. Collaboration between banks, regulators, and other stakeholders is crucial to balance regulatory compliance, innovation, and sustainable growth in the banking sector.

Partnering with Regulatory Tech companies like Maveric, who bring deep domain knowledge, is an effective way to stay updated on how technology offers a powerful strategy to meet the frequently changing regulatory mandates. 

Role of Regulatory Bodies in Banking

The banking industry is vital in the global economy, providing essential financial services and intermediation between savers and borrowers. To ensure the stability, integrity, and proper operation of the banking sector, various regulatory bodies have been established worldwide. These organizations set and enforce rules, monitor compliance, and supervise banks to maintain a sound financial system.

Key regulatory bodies with their responsibilities.

Basel Committee on Banking Supervision (BCBS):

The BCBS is an international standard-setting body comprising central banks and regulatory authorities from different countries. Its primary objective is to enhance global financial stability by developing and promoting regulatory standards and guidelines. The committee is best known for the Basel Accords, a series of recommendations on capital adequacy, risk management, and liquidity requirements, which member countries incorporate into their national banking regulations.

Financial Stability Board (FSB):

The FSB is an international organization that coordinates and promotes global financial stability. It brings central banks, regulatory authorities, and international standard-setting bodies together to develop and implement policies to safeguard the financial system. The FSB conducts assessments of vulnerabilities and risks, proposes reforms, and monitors their implementation. It also serves as a forum for cooperation and information exchange among regulatory bodies.

Federal Reserve System (FRS):

The Federal Reserve, often referred to as the “Fed,” is the central banking system of the United States. Its primary responsibilities include conducting monetary policy, supervising and regulating banks, and maintaining the financial system’s stability. The Federal Reserve has several regional banks across the country. It works with other regulatory bodies, such as the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB), to ensure the safety and soundness of the banking industry.

European Central Bank (ECB):

The ECB is the central bank for the Eurozone countries and plays a pivotal role in the regulation and supervision of European banks. It formulates and implements monetary policy, conducts stress tests, and assesses the financial health of banks through the Single Supervisory Mechanism (SSM). The SSM, in collaboration with national regulatory authorities, is responsible for supervising significant banks, while smaller banks fall under the direct supervision of federal regulators.

Financial Conduct Authority (FCA)

The FCA is the regulatory body responsible for overseeing the conduct of financial firms in the United Kingdom. Its main objectives are to protect consumers, maintain market integrity, and promote competition in the interest of consumers. The FCA sets rules and standards for financial institutions, enforces compliance, and takes disciplinary action against firms that breach regulations. It works alongside the Prudential Regulation Authority (PRA), which focuses on ensuring the safety and soundness of banks.

Conclusion

The banking industry operates under the scrutiny and guidance of various regulatory bodies to maintain stability, protect consumers, and mitigate systemic risks. The organizations mentioned above represent a fraction of the global regulatory landscape, each uniquely shaping and enforcing banking regulations. By setting standards, conducting supervision, and promoting cooperation, these bodies strive to create an environment conducive to trust, transparency, and long-term sustainability in the banking sector.

Given the frequent changes, senior banking leaders must stay informed about the specific regulations applicable to their regions and actively engage with regulatory bodies to ensure compliance and contribute to the continued development of a robust banking industry.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

 

View

C.L.E.A.N. in Banking

C.L.E.A.N. in Banking

Banks today face various challenges due to rapidly evolving market dynamics, technological advancements, changing customer expectations, and regulatory requirements. 

Multi-headed challenge areas. 

Digital technology has disrupted the banking industry, compelling banks to undergo digital transformation. This transformation involves modernizing legacy systems, adopting advanced analytics, implementing robust cybersecurity measures, and providing seamless digital experiences. 

Customer expectations. Customers now expect personalized, convenient, and frictionless banking experiences. They demand omnichannel access, quick response times, and tailored solutions. 

Thirdly, the Fintech companies have emerged as agile competitors, leveraging technology to provide innovative and customer-friendly financial solutions. Fintech firms offer services such as digital payments, peer-to-peer lending, robo-advisory, and mobile banking, often with greater speed and efficiency. 

Lastly, as Banks operate in a highly regulated environment, they face compliance challenges such as A.M.L., KYC, data protection, and cybersecurity requirements. Compliance with these regulations demands significant resources, including technology investments, stringent risk management practices, and continuous monitoring. 

What is the way ahead? C.L.E.A.N.

Addressing these challenges requires banks to be agile, innovative, and customer-centric. It calls for strategic investments in technology, partnerships with fintech firms, effective risk management, compliance frameworks, and a customer-first mindset. By proactively addressing these challenges, banks can position themselves for success in the dynamic and increasingly digital banking landscape.

At Maveric, these practices are C.L.E.A.N. – Co-creators, Lean, Evolve fast, Agile, and Next-gen tech. This blog elaborates on how these create a difference in retail, corporate, and wealth management. 

Co-creation. 

Co-creation goes beyond traditional product development processes, where banks design solutions based on their insights and assumptions. Instead, it involves involving customers and other stakeholders in ideating, planning, and developing products and services. By leveraging the collective intelligence and diverse perspectives of customers, banks can create solutions that are better aligned with customer expectations and preferences.

Two Examples of Co-Creation in Banking

  1. Innovation Labs and Hackathons: Banks are increasingly setting up innovation labs and organizing hackathons to engage customers, employees, and external stakeholders. These events bring together diverse talent and expertise to collaborate on solving specific challenges and developing new banking products and services.
  2. Customer Feedback and Surveys: Banks actively seek customer feedback through surveys, focus groups, and online platforms to gather insights on their preferences, pain points, and expectations. 

Lean Practices in Banking

From value stream mapping, standardized work, kaizen events, Just in Time inventory management, Error proofing, Gemba walks, and visual management, the lean practices in Banking have come a long way since Toyota popularized the concept of Lean in manufacturing. These are just a few examples of how lean practices can be applied in the banking industry to improve efficiency, reduce waste, and enhance customer value. By adopting lean principles and techniques, banks can optimize their processes, improve operational performance, and deliver better customer experiences.

Evolve Fast.

The third lever in Maveric’s CLEAN methodology is Evolve-Fast. In today’s rapidly evolving banking landscape, developing quickly is crucial for banks to remain competitive and meet customer expectations. Here are some key strategies that banks can adopt to evolve rapidly – 

  1. Embracing digital transformation, modernizing legacy systems, adopting advanced technologies, and reimagining customer experiences. 
  2. DevOps Methodologies: DevOps methods like – iterative development, quick feedback loops, and continuous improvement help to promote collaboration between dev and ops teams, ensuring faster delivery, reduced time-to-market, and higher quality.
  3. Collaborate with Fintechs: Banks can collaborate with fintech firms through partnerships, accelerators, or investment programs to leverage their expertise and accelerate innovation efforts. This collaboration helps banks tap into new technologies, enhance customer experiences, and drive rapid innovation.

Agile Banking: 

Agile practices allow banks to respond more quickly to changing market dynamics. These methodologies, borrowed from the software development world, aim to make banking organizations more responsive, flexible, and customer-centric. Agile methods enable banks to adapt to changing market dynamics, rapidly deliver innovative solutions, and enhance customer experiences. Here are some examples of agile banking practices – agile project management, cross-functional teams, minimum viable products (M.V.P.), Continuous Integration and deployment, Customer-centric design thinking, and an Agile culture and mindset.

Next-Generation Banking

The banking industry is continuously evolving, driven by emerging technologies that can transform how financial services are delivered. These emerging technologies have the potential to reshape the banking industry by enhancing customer experiences, improving operational efficiency, enabling new business models, and driving innovation. Banks that successfully leverage these technologies can stay competitive, deliver superior services, and meet customers’ evolving demands in the digital age. The list – includes A.I., ML, R.P.A., IoT, Cloud Computing, Open Banking and APIs, BD&A, Biometrics, Identity management, and Blockchain and Distributed Ledger Technology (D.L.T.). 

Conclusion

The C.L.E.A.N. set of practices in Maveric is crucial for Banks to foster a healthy stream of innovations for their customers. The industry is experiencing a wave of innovation driven by technological advancements, changing customer expectations, and evolving regulatory landscapes. By embracing these innovations, banks can stay competitive, deliver superior services, and adapt to customers’ changing needs and expectations in a rapidly evolving industry.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership. 

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

View

Why Regulatory Compliance Software is Becoming a Must-Have for Banks

Why Regulatory Compliance Software is Becoming a Must-Have for Banks

Reporting to regulators documents information about how a banking business works and what it does. It includes both internal checks and reports from the outside. The goal of reporting is to ensure that people who need access must have it and that all parts of a business follow the law and best practices. Banks must ensure it follows legal reporting rules to determine which laws and regulations apply to them. Then, it must be known that everything is being done to meet those needs.

Why is Regulatory Reporting critical?

Regulatory reports are a way to ensure that banks follow all the rules set up. But compliance isn’t just about following the law, and it shouldn’t be seen that way. It also involves ethical standards and social duty.

Every part of a bank should follow the rules: workers, contractors, suppliers, and customers. Banks should also ensure that no law or regulation is broken, even if done by accident. To be in line, rules must have clear steps that help banks find risks. They should also explain how these risks will be reduced and how controls will be put in place to ensure they will continue declining.

Partnering with domain experts in Regulatory Tech offerings like Maveric Systems empowers leading FIs with cutting-edge know-how and future-ready execution.

<<Recreate Infographic in Maveric Colors. Title it: “Regulatory Tech for Banking Compliance.” The source is here>>

 

 

Four Essential Risks Associated with Regulatory Reporting.

  1. Operational Risks: Operational risk is the risk to present and future financial performance that comes from processes, people, technology, or systems that don’t work well or don’t work at all. It includes risks like lousy quality control, employee mistakes, theft, fraud, data loss, hacking, natural disasters, and problems with following the rules.
  2. Compliance Risks: Compliance risk is the risk of breaking laws and rules and not following the standards, policies, and processes set.
  3. Strategic Risks: Strategic risk happens when a bank makes bad decisions, doesn’t do an excellent job putting those decisions into action, or doesn’t have the flexibility to adapt to changes in the banking industry. When regulatory reporting is done wrong or needs to be done at all, a bank’s strategic risk may increase because the management will be using inaccurate information to monitor the bank’s general performance and health.
  4. Reputational Risks: Lastly, image risk has to do with how the public sees the bank’s finances and how that affects the bank’s ability to stay in business. If the bank’s image were hurt, it would negatively impact relationships, services, and customers. This could damage the bank’s ability to compete. It may also be hard to keep the trust of customers and other essential people since it shows that the processes are implemented to prevent data breaches and other problems that are not working and need to be fixed.

Conclusion

Banks like Goldman Sachs, Wells Fargo, and JP Morgan Chase have paid over $7.5 billion in fines for not following rules. This shows that even the most prominent players always have to deal with risks and regulations. Regulators like FDIC, FRB and CFPB, and the Office of the Comptrollers (OCC) constantly check banks for compliance with risk management policies. In a few cases, they’ve taken steps to ensure they follow the rules because of an underlying weakness that turned into an uncertain situation, practice, or violation of the laws.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

View

Why Regulatory Compliance Software Is Becoming Essential for Banks

Why Regulatory Compliance Software Is Becoming Essential for Banks

Regulatory compliance means that a business or industry is aware of and in line with all the laws and rules that apply to it. These rules can be made at the local, state, federal, or foreign levels. Corporate compliance, on the other hand, is about following internal policies and rules to reach the goals and targets that the company has set for itself. But both types of compliance are essential because they can drive the organization’s strategic direction, decide its ethical framework, and ensure that people are held accountable and that information is clear.

Any compliance worker will tell you that financial safety is the first benefit of following the rules. If an organization doesn’t follow the rules, it might have to pay a lot of money. This happened to Goldman Sachs, Wells Fargo, and JP Morgan Chase in 2020. They had to pay fines totaling $7.50 billion out of the $11.39 billion that all U.S. banks had to pay that year.

Partnering with domain experts in Regulatory Tech like Maveric Systems equips leading banks with a decisive advantage in profitability and strategic preparedness.

Regulatory Compliance Software – Five Indispensable Ways for Banking Growth.

  1. Business Continuity – Regulatory compliance gives businesses many signs that show them what they need to do to be successful in their field. Compliance laws also came about to help make the market more uniform and let businesses compete fairly, ethically, and on an even playing field. Companies that follow the rules and regulations may do well in their area.
  2. Cyber-protection: Industries with more risks, like healthcare and finance, know that the information they collect is valuable and will likely be targeted by people with malefic intent. But sometimes, people in other businesses think they are less likely to be attacked. This false belief often leads to less attention on regulatory compliance and less security, which makes cyberattacks and data breaches more likely. Customers are less potential to stick with a company after a data breach, which can have a disastrous effect on the company’s finances and even cause it to go bankrupt or shut down.
  3. Increasing Costs of Compliance: After the 2008–2009 global economic crisis, governments worldwide have been putting out more and more rules for financial companies. India is no exception. Central Information and Management Systems (CIMS) and the Public Credit Registry (PCR) are the next steps for RBI’s regulatory reporting and lending information systems. For institutions with powerful RegTech frameworks, sending data to the regulator would be as easy as connecting to RBI’s system.
  4. New Normal Post COVID: Social distance will remain a standard shortly. Even simple processes like physical verification need to be done differently in this new normal. Recently, RBI permitted banks to use video KYC to check out applications for loans and credit cards. Last month, SBI returned its “Insta Savings Bank Account” program. These new projects must use new tools to ensure compliance and reduce risk. The biggest threat is that personally identifiable information (PII) data could be de-anonymized by devices that might not be safe, like the devices that users use to log into the bank’s network.
  5. Optimizing Banking Operations: Finance has always been a highly controlled field because people’s money is at stake. Technology has spread into all areas of life but has always been slow and careful, held by many different officials. This way of doing things was changed by fintech, which used technology to combine legal compliance with its new services successfully. The same technologies, like Blockchain, AI, machine learning, and cloud computing, are now being used by financial institutions to ensure they follow protocols like AML, KYC, NPA classifications, etc.

Conclusion

With more digitization and cheaper, safer cloud, robotics, and cognitive computers, there are more situations where technology can help. Compliance frameworks can only be finished with the help of people, but technology can automate the most boring, time-consuming, and repetitive chores. RegTech is moving beyond reducing risk and making sure people follow the rules to figuring out how to optimize compliance costs. It can change businesses by giving business insights, improving the customer experience, driving new goods and services, and helping the digital transformation of the industry as a whole.

In short, with the right mix of technology, compliance can become a relatively straightforward process that works well with other business activities.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

View

What Exactly Is Regulatory Compliance In The Banking Industry

What Exactly Is Regulatory Compliance In The Banking Industry

Regulatory compliance aims to ensure the bank operates within regulation, safeguarding its integrity and industry reputation. The function oversees multiple duties: protecting bank data, avoiding government fines, avoiding tax evasion, monitoring and reporting anti-money laundering activities, assessing risks, and ensuring zero violation of banking ethics.

The Regulatory function achieves its stringent aims by proactively conveying the compliance policy to staff, enforcing an ethical bank culture, and process standardization.

Working with banking domain experts like Maveric on industry-first RegTech Solutions assists leading banks in increasing their innovation potential and achieving growth plays.

List of Financial Data Protection Regulations

  1. GDPR (GDPR): The European Union’s GDPR is rigorous (EU). It manages EU data and online privacy.
  2. PCI-DSS (PCI DSS): Financial data security guidelines protect consumer data. It standardizes processing, storing, and sending cardholder data.
  3. Gramm-Leach-Bliley (GLBA): Financial firms must disclose their data-sharing policies under this law. Protect critical info.

Laws Regulating Financial Compliance

  1. Sarbanes-Oxley (SOX): After Enron, Tyco, and WorldCom, the US passed the Sarbanes-Oxley Act. The Act addresses financial disclosure and recording by organizations. It will combat corporate fraud and corruption. Financial service compliance requires cybersecurity to protect financial data.
  2. AML Directives: AML directives prevent money laundering and terrorist financing. It helps standardize EU regulations.
  3. EMIR: EU MiFID II regulates financial markets. It safeguards investors. It standardizes financial services practices.

The Growing Use Case for Regulatory Compliance in Banking

As technology and consumer habits change, businesses must follow more regulatory guidance. Decades ago, there was no internet or digital assets. These things drive the economy. Thus, effective laws are needed for consumer and corporate well-being. Unsurprisingly, today companies are prioritizing regulatory compliance. Compliance reduces security breaches and data losses. Compliance also prevents license loss, financial fines, reputation damage, and excessive customer turnover.

Regulatory Compliance Focus in Banking

The Costs of Non-Compliance

The impact of non-compliance with rules and regulations has more than just a monetary impact on your firm. Financial service customers choose reputable providers that comply. If customers read online about a data breach or CFPB penalty, they may hesitate to use your financial services. In addition, lawsuits from customers are a growing risk of non-compliance. Target settled claims for $18.5 million, while Nationwide Insurance was fined $5.5 million. Lawsuits and penalties can hurt your business. For example, if you break FDA laws, you can lose access to consumers that seek third-party assurance on the monies deposited at your bank. However, one compliance blunder can wipe out years of cultivating your company’s reputation with other firms and customers.

Preliminary Steps for Regulatory Compliance

  1. Complete a Compliance Audit – Understanding the areas where the business falls short and the inefficiencies.
  2. Assessing the quantitative and qualitative impact on your business. Actionable steps for improving come out of this exercise.
  3. Appointing a Chief Compliance Officer: A Corporate Compliance Officer is tasked with supporting the organization’s ethics, accountability, and integrity.
  4. Create Internal Company Policies: Institutionalizing compliance handbook and routine self-assessment exercises keep the employee sharp across various regulations.
  5. Regulatory Compliance Training: Training employees on updates and changes to corporate compliance policies is vital.

Ensuring Regulatory Compliance

  1. Industry regulations: Determining which laws affect the firm based on region and industry.
  2. Establish law requirements: The business and its operations determine the compliance requirements for each law. Assess specific compliance responsibilities.
  3. Record procedures: Good documentation shows how business practices meet regulatory compliance criteria to avoid fines as and when audited.
  4. Regularly check standards: Regulations vary with cyber security. To stay compliant, track compliance requirements.

Conclusion

Financial services marketing is heavily regulated for a good reason. Most financial services organizations have had their carefully planned efforts destroyed by legal or compliance. Understanding full regulatory restrictions help FIs strategize and develop around them instead of letting them stifle innovation.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric Systems accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric Systems teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

View