Our goal with this infographic is to give an overview of regulation in banking and finance to help you navigate your business successfully in a complex and consistently changing environment.
Based on our long-standing experience in providing regulatory support to clients when defining their digital banking strategy, including regulatory set-up and the acquisition and expansion of financial services licenses, we are confident to have the right knowledge to provide you with an accurate picture of the current regulatory environment in banking.
Why and how financial services are regulated
Banks and financial institutions play an important role in the global economy and therefore are subject to heavy regulations and supervision by many different regulatory bodies ranging from central banks to global policy makers and dedicated financial crime units to name a few.
For example, the scope of activities that banks can undertake is limited, there are capital requirements to lower the risk, interest rate caps to protect customers and reporting requirements for supervision and transparency, amongst many others. All this regulation aims to protect the stability of the economy, protect the position of the customer and achieve desired social goals.
Regulatory Trends
A rapidly changing market environment regulators in front of the challenges to balance the promotion of innovation and ensuring the safety and soundness of the financial system. Some of those challenges include the impact of global events such as the pandemic, the war in the Ukraine or the increasing demand for environmentally justifiable finance but also the rise in more sophisticated technologies such as DLT and increased collection of data.
Licensing Frameworks
One of the approaches of regulators to strike the right balance is the adoption of new digital banking licensing frameworks or hybrid models as alternative to the traditiona banking license to allow new entrants to offer limited services und lighter regulatory requirements in many jurisdictions. Those licensing frameworks are bound the specific requirements ranging from the scope of services to conditions on physical presence and overall eligibility of the business.
How to apply for a license
When considering launching a new initiative and therefore being required to apply a financial services license in some form, companies should initially identify which regulatory framework and regime is the right one to target and is aligned with the ambitions. Hereafter, a thorough and well planned preparation and submission of the application package to the regulator are key for the success of license acquisition.
Download the infographic below to learn more about the current regulatory landscape in banking and finance.
