Article

Dealing with divergence

A strategic response to growing complexity in global banking rules

The shifting feelings toward global financial regulation convergence could lead to higher compliance costs for banks and reduce their ability to predict regulatory impacts on performance and profitability.

Several countries are indicating a greater desire to deviate from international banking standards, notably the Basel framework. Meanwhile, stirrings of populism and protectionism are fueling uncertainty in both developed and emerging markets. These developments are creating new concerns for the nearly decade-long global drive toward financial regulation convergence, at a time when many banks are struggling for profitability and regulatory compliance costs remain high.

How can internationally active banks cope with these trying conditions? A divergence-resilient approach to managing regulatory complexity can help bank officers and directors deal with the impact of growing and shifting regulatory demands on bank strategy, operations, and technology. Such an approach can include targeted investments, such as in robotics and automation solutions, that can aid in dealing with the emerging, uneven environment. By taking a divergence-resilient approach, banks can improve commercial decision-making and create more sustainable business models.
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About the Center for Regulatory Strategy
The Center for Regulatory Strategy is a source of critical insight and advice, designed to help clients to anticipate change and respond with confidence to the strategic and aggregate impact of national and international regulatory policy.

With regional hubs in the Americas, Asia Pacific, and EMEA, the Center combines the strength of Deloitte’s regional and international network of experienced risk, regulatory, and industry professionals—including a deep roster of former regulators, industry specialists, and business advisers—with a rich understanding of the impact of regulations on business models and strategy.

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