Banking Executives in Asia Cite Regulatory Risk as Top Business Threat

17 December 2014

Survey Also Finds Global Regulatory Reform is Driving Heavy Operational, Management Pressures 

In a joint survey released today from Wolters Kluwer Financial Services and Regulation Asia, banking executives indicated regulatory risk as the issue posing the greatest threat to their business. Reputational risk came in second, with credit risk and IT risk also named top threats. Seventy-three percent of those surveyed indicated they were “very concerned” about managing compliance in the face of ongoing regulatory change.  

Ninety-one percent of surveyed executives said regulatory and risk concerns have had a direct impact on customer service. Other key findings included:

  • Executives noted the greatest challenges in addressing regulatory change were managing their businesses’ strategic goals, business plans, and bottom line (37%); allocating resources to manage regulatory change (21%); and controlling costs (20%).

  • Eighty percent of executives agreed that increasing regulatory pressures were a significant driver of business change.

  • Among the top priorities cited in dealing with risk and regulatory issues over the next 12 months were compliance with new and pending regulations (34%); controlling costs (20%); and capital management (10%).

“Sixty-five percent of all respondents said global regulations were their highest area of concern, yet they face challenges in implementing them in their daily practices. We believe the root of the problem is a shortage of resources and competing priorities,” commented Brad Maclean, head of research for Regulation Asia. “Our findings point to a need for organizations to question what strategies are needed to turn these regulatory demands into a future competitive advantage.”

“Technologies blended with the appropriate regulatory content are incredibly beneficial in giving executives a sophisticated, top-down view into their organization, and they provide effective workflow tools to manage regulatory obligations through to implementation in a meaningful way,” said Spark Wang, senior regulatory intelligence expert at Wolters Kluwer Financial Services.

“The commoditization of banking products and services in recent years has likely increased the challenge,” Wang added. “However, as regulatory frameworks are being internationally and consistently applied, we see financial organizations becoming more aware of how to manage emerging risks so they can grow safely and profitably in the context of a new, global regulatory regime.”

"Even five years after the global financial crisis, bank executives are still grappling with new regulations that are extraterritorial and constantly changing. Despite massive increases in resources and manpower, uncertainty still exists on what these changes will mean to their businesses and end users," says Peter Guy, editor-in-chief of Regulation Asia.

The survey was conducted through interviews of 99 senior banking executives based in Singapore with local, regional and global financial institutions. C-level executives comprised over one-half of the respondents, with 32 percent from financial institutions with above $50 billion assets under management.

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