Regulation – much more exciting than you think!
Published on: July 1, 2024
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CSRD, CRR or perhaps KWG? ECB, BaFin, FMA or SRB? The financial sector is governed by an extensive array of regulatory mandates, each exerting a profound influence on its business models and operating processes. Banks should aim to identify regulatory changes and advancements early, assess their impact on the institution and implement them seamlessly and in good time. In addition, a broad spectrum of requirements must be met in day-to-day operations, meaning that changes, e.g. due to digitalization measures or new business models, necessitate regular adjustments.
My name is Helena and I have been working as a Senior Consultant at zeb since October 2023. In this article, I will take you on a deep dive into the “Regulatory Management” department at zeb. Together, we’ll explore the role of regulation in the strategic orientation of financial services providers and uncover how mastering regulatory challenges can give individual institutions a distinct competitive advantage.
From legislation to implementation
The life cycle of a regulatory mandate is long and involves many parties. The process spans from a first idea in political circles such as the G20 or standard-setting bodies such as the BIS and IAS, to detailed frameworks at the European (EU, EBA, ECB) or national (BaFin, FMA) level, culminating in implementation and adherence to the stipulations.
Furthermore, the industry frequently participates in consultations regarding new regulations, aiming to prevent misregulation or overregulation and to gauge the potential impact on the sector more accurately. In order to formulate well-founded positions at an early stage – also for the benefit of our clients – and to be able to assess the impact, we scrutinize proposed regulations, engage in interdepartmental dialog and thus contribute our expertise to the discourse. We proactively assist our clients in pinpointing necessary modifications promptly and in orchestrating comprehensive impact assessments.
The implementation phase kicks off at the latest once the requirements have been formally approved. This necessitates a deep comprehension of the mandates and a careful assessment of their significance for our diverse clientele. Variables such as organizational size, business model and geographical location dictate the relevance of different regulatory aspects. After delineating the scope, strategic initiatives and project architecture, we proceed to the implementation phase. This involves the creation of new guidelines, the refinement of processes, and the (re)design of (IT) systems, all accomplished through close collaboration with our clients.
We regularly deliberate challenges and approaches to solutions both within the project and among representatives of the financial industry in order to derive best practices and common positions. In addition, we conduct employee training to ensure that everyone involved understands and can comply with the new requirements. Our role extends beyond providing our expertise in projects and dialogs; we also continuously compile our knowledge and experience within our proprietary RegHub. RegHub, zeb’s online platform, serves as a reservoir of expertise where specialists elucidate new regulations, evaluate them for our clientele and provide targeted recommendations.
Regulation – also a matter of strategy?
Regulation encompasses far more than mere legal compliance; it serves as a decisive factor in shaping the strategic orientation of financial service providers. The financial industry is subject to constant change. In this environment, the regulatory framework holds critical significance for banking institutions. Banks require a clear strategy detailing the implementation of regulatory mandates to meet baseline requirements and bolster customer trust. One topic that has been keeping us very busy recently is the specifications and requirements in connection with ESG. However, we must not neglect the business model and the impact of regulatory developments upon it. This is where we come into play: with our expertise and experience, we support institutions not only in coping with regulatory changes and mitigating risks, but also in crafting effective compliance strategies and pinpointing opportunities arising from the regulatory landscape. By offering tailored solutions, we empower our clientele to transform regulatory hurdles into opportunities that contribute to their long-term success.
Regulatory management
Regulatory requirements therefore serve as the guardrails in both the implementation of new requirements and ongoing business operations. Take capital requirements, for instance: they vary based on the business model’s type and scope, while the choice of location of the headquarters and subsidiaries significantly influences the extent of regulatory obligations. Consequently, each economic or business policy decision carries regulatory implications, profoundly affecting both the costs incurred and therefore the required income.
In our projects, we guide clients through the maze of decision-making alternatives and governance structures, considering their regulatory consequences to ensure the most advantageous outcomes for their goals.
Why regulation?
Whether analysis, implementation, regulatory strategy or management, our “Regulatory Management” department prides itself as zeb’s “Regulatory Competence Center”. Within the scope of relevant projects, we support the entire range of financial companies, encompassing major banks, private banks and specialized institutions like leasing companies, as well as stock exchanges and fintech companies.
The vibrancy of our project work and thematic pursuits is amplified by the collaborative spirit shared with subject matter experts or more experienced project team members. Regular off-site meetings with the entire team and specialist training programs help us to achieve this.
Can you envision yourself in one of these roles? Are you equipped with the ideal blend of regulatory affinity and strategic orientation? If you are interested in working in the „Regulatory Management“ team, or if you simply have questions, feel free to contact me by e-mail or on LinkedIn!
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