2025 banking regulatory outlook: Gearing up for change

Despite a shift in administrations, the banking industry will likely remain focused on addressing outstanding supervisory issues and demonstrating sustainable remediation in 2025. Institutions should prioritize governance, risk management, and compliance programs while remaining competitive and innovative to meet customer expectations. Failure to execute strong remediation and regulatory compliance could lead to higher remediation costs and extended time in the regulatory “penalty box.”

For our 2025 banking regulatory outlook, we’ve identified four key topics affecting the industry:

• Navigating an uncertain regulatory environment
• Evolving supervisory focus on issue remediation
• Financial resilience remains top of mind
• Keeping an eye on non-financial risks and internal controls

US elections and consequences for personnel and policy

A new presidential administration and changes in party control across both chambers of Congress are expected to affect the regulatory environment for banks and other financial institutions in 2025. A second Trump administration will introduce new regulatory leaders and is likely to focus on deregulatory efforts, including rolling back of—or even potentially overturning—several of the previous administration’s regulatory initiatives. While a more permissive regulatory environment is expected, changes to financial supervision typically come more slowly. Banks will still need to address their existing supervisory findings and should continue to prioritize improving their risk management and controls.

President Trump could revoke executive orders from President Biden on mergers, climate risks, and artificial intelligence (AI) and revive prior deregulatory orders. The new administration might also look to ease regulations on bank mergers and nonbank entries.

Seizing new opportunities and achieving sustainable growth

Banks are entering 2025 with numerous regulatory challenges and opportunities. A new administration provides a chance to reshape banking regulations and create new business avenues. However, the year will be marked by complexity and uncertainty as recent Supreme Court decisions and industry-led legal challenges create an unpredictable regulatory environment. Banks should be cautious of regulatory fragmentation, which could result in inconsistent requirements across federal agencies.

The regulatory focus will likely be on issue remediation and financial resilience. Changes to bank capital and liquidity rules may have an impact on cost structures, while non-financial risks such as operational resilience, cybersecurity, third-party risk management, financial crime, and AI are expected to remain priorities. Given this, banks should prioritize regulatory engagement and strong governance frameworks. Staying responsive to supervisory feedback, addressing supervisory findings, and maintaining agility will be crucial to navigating the fast-evolving landscape.

If you are interested in learning more about the banking industry, check out our recently released 2025 banking and capital markets industry outlook here.