Article

Strengthening resilience

2019 Canadian regulatory outlook for financial institutions

The past decade has seen profound and lasting changes in the structure of the economy, employment, and society. The providers, consumers, and regulators of financial services are all changing. The challenge to the financial services industry now is how to innovate without weakening risk management, as regulators across the world continue to enhance expectations intended to maintain a strong, resilient financial sector.

What’s in store for the financial services sector in Canada this year? We expect financial institutions (FIs) will continue to pursue technological innovation to help generate growth as well as focus intensely on optimizing productivity, operating leverage, and structural cost reduction.

These are some of the ideas explored in Strengthening resilience: 2019 Canadian regulatory outlook for financial institutions, our perspective of the themes that will dominate the year in the financial services sector. The full list is:

  • Business model transformation: Real progress needs to be made regarding the London Interbank Offered Rate transitioning and Fundamental Review of Trading Book readiness.
  • Cyber: Supervisors are broadening their oversight beyond the nuts and bolts of risk management programs, with breach reporting and risk and regulatory implications associated with cloud computing emerging as central themes.
  • Digital compliance: A progressive compliance program is imperative to keep both consumers and institutions safe while the business is being optimized.
  • Financial crime: Criminals are perpetrating increasingly sophisticated financial crimes, but FIs are continuing to rely on inefficient and rigid operating models for prevention and detection.
  • Fintech: The fintech regulatory landscape is evolving with the creation of a global sandbox. Among the participating regulatory bodies is the Ontario Securities Commission, which was the first Canadian regulator to create its own sandbox, the OSC Launchpad.
  • Integrated data: To address growing concerns across all aspects of risk management and regulatory compliance, data management and data quality needs to be an enterprise activity, with shared responsibilities and accountability across all three lines of defence.
  • Payments modernization: This development promises to confer significant advantages to the Canadian economy. But first, FIs need to determine how it will affect their risk profiles, and develop a prioritized list of responses.
  • Risk operating model transformation: FIs are rethinking their risk and compliance activities, seeking to harness technology and business innovations while maintaining safety and soundness.

 

Read Strengthening Resilience: 2019 Canadian regulatory outlook for financial institutions for more information about the regulatory trends that will have the most impact on Canadian financial institutions this year.
 

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