2018 Banking Regulatory Outlook

Anticipating updated compliance requirements

Gain insight into key regulations that companies in the banking industry should be monitoring and addressing in 2018.

Embracing complexity: 2018 trends in banking regulations

Most banks are forging ahead with their risk and compliance initiatives, even as regulatory uncertainty will likely remain a significant and ongoing challenge. Even if lawmakers and regulators make certain definitive changes, banking organizations should continue to drive the effectiveness and efficiency of their risk and compliance programs so they meet applicable laws, regulations, and supervisory expectations. And in most cases, they don’t have the time or luxury of waiting to see how things will shake out.

Fortunately, many of the changes banking organizations are making to achieve compliance are useful improvements that are worth doing from a risk and business perspective.

Read on to learn more about the banking regulations we’re tracking for 2018.

Back to top

This publication is part of the Deloitte Center for Regulatory Strategy annual, cross-industry series on the year’s top regulatory trends. Learn more about regulatory challenges and opportunities in other industries on our regulatory outlook homepage.

A pivot from building to sustaining

While there are still some reform initiatives to be proposed by regulators and completed by the industry, the vast majority of the post-crisis reform blueprint has now been built, including the most impactful components.

There is, however, a realization that the largest banks are at varying stages of maturity in their journey to transformation under the enhanced standards and broader governance, risk, and compliance expectations. Most have nearly completed the build phase and have entered, or will soon enter, the critical phase of rationalizing and sustaining what they have built.

In our experience, there are five key levers that can help a firm effectively pivot from build to sustain:

  1. Simplify
  2. Centralize
  3. Standardize
  4. Automate
  5. Enhance

Banks that pivot well from the build to sustain mode can better lower costs, improve efficiency, enhance quality, and gain sustainability. They can also be positioned to have the flexibility to take advantage of market opportunities.

Back to top

Regulatory divergence

A headwind for the pivot from build to sustain is regulatory divergence—both in substance and timing—across the global landscape. For banks with a global presence, this divergence creates uncertainty, complexity, and an uneven playing field.

To effectively navigate these challenges, banks need a disciplined approach that recognizes regional tailoring of regulatory and compliance initiatives as a fact of life.

This includes asking three types of questions:

  1. Strategic. Does divergence impact the sustainability of cross-border business models and managers’ ability to plan and make well-informed regulatory and commercial decisions?
  2. Operational. Will divergence increase the complexity of regulatory processes, and are bank governance structures, controls, and regulatory capabilities up to the task of coping with this fragmentation?
  3. Technological. Will divergence increase the pressure on banks’ data management systems to a point that strategic IT capability investments will be required?

Back to top


Regulators have been assessing their rules, guidance, and supervisory approaches with an eye toward improving the effectiveness of outcomes. As part of this trend, the Federal Reserve Board (FRB) is signaling a new age of governance and accountability through recent proposals on board effectiveness, as well as a new rating system that specifically rates governance and controls.

Here are some steps that a board should consider to improve its effectiveness:

  • Confirm that it’s setting a clear and consistent direction to management regarding the bank’s strategy and risk tolerance
  • Review and revise materials to eliminate unnecessary information flows
  • Enforce accountability at the senior management level
  • Foster a culture of controls into key areas
  • Safeguard the independence and stature of the CRO and CAE and ensure that they have unfettered access to board members
  • Conduct self-assessments in line with the proposed guidance with a scope that includes capabilities and governance structure

Back to top

Highway through a city

Resolution planning

Over the past several years, the FRB and Federal Deposit Insurance Corporation (FDIC) have shifted the focus of resolution planning, now emphasizing the capabilities that banks must demonstrate in order to have a credible plan. Feedback letters to institutions—as well as issued guidance and FAQs—have been the main drivers of recent resolution planning activity, and all emphasize plan execution rather than conceptual strategy.

Institutions should take this opportunity to review their organizational recovery and resolution planning (RRP) operating models, focusing on the ability to efficiently and accurately fulfill submission requirements and adapt to regulatory changes that could affect whether their operations can deal with different recovery and resolution scenarios.

Back to top

Data quality and integrity

Regulatory expectations continue to risk for improved governance, controls, and data infrastructure to ensure data quality. Significant improvement is expected to remediate issues discovered after several horizontal reviews at domestic banks and foreign banking organizations (FBOs).

Although new requirements have slowed, regulator expectations for data quality and controls have been elevated. Given banks’ past issues, the rollout of CFO attestation and materiality policies, and the amount of work yet to be accomplished, regulators are expecting to monitor and challenge banks’ reported progress.

Back to top

Financial crimes risk

Financial crimes risk management continues to support national security objectives and focus on preserving the integrity of the financial system, domestically and across the globe. Over the past few years, the number of civil and criminal enforcement actions related to anti-money laundering (AML) has increased around the world.

Specific actions that can be taken to strengthen AML and sanctions compliance programs include:

  • Augmenting AML/sanctions governance through improved monitoring and reporting
  • Establishing a robust and quantifiable risk assessment process
  • Leveraging and investing in technologies and expertise
  • Prioritizing compliance program performance

Back to top


Consumer protection

Despite proposed legislative changes and pending litigation that could alter the structure of the Consumer Financial Protection Bureau (CFPB), the topic of consumer protection isn’t going away. When operational breakdowns cause real or perceived consumer harm, a firm’s reputation can suffer materially from negative press, social media attacks, and enforcement actions and fines, as well as bipartisan condemnation from Congress.

Here are some specific actions that can strengthen a bank’s compliance management systems:

  • Inventory the bank’s compliance management processes, prioritize them by risk, and then implement a program to review each process end to end
  • Implement a robust process to aggregate, categorize, and analyze customer complaints, whistleblower comments, fraud investigations, social media comments, and other “voice of the customer” channels
  • Monitor regulatory publications to identify industry issues so they can be proactively addressed
  • Consider RPA to improve compliance outcomes and drive effectiveness and efficiency

Back to top

Four skyscrapers

Taking decisive action in uncertain times

Regulatory uncertainty remains a fact of life. But in most cases, waiting for absolute certainty isn’t a viable option.

The good news is that many of the changes banking organizations are currently implementing make good sense from a business perspective—not just a regulatory perspective—and are worth doing no matter how the future unfolds.

Learn more about these key trends and how embracing complexity can help you accelerate performance, stay ahead of change, and successfully navigate banking regulations.

To learn more about foreign banking challenges and other regulatory considerations, download Navigating the year ahead: 2018 banking regulatory outlook.

Back to top


Look again

In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.

Discover more Industry Outlooks.

Back to top

Did you find this useful?