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So what do the emerging regulations imply for your customer?

The tightening of banking regulation is one of the biggest side effects of the last financial crisis. While central banks and other regulators are seeing to it that their subjects stick to the letter of the law, a breed of informed consumers is enforcing it in spirit, demanding integrity, transparency and accountability from financial service providers. In parallel, a slew of other guidelines – for example, those championing green banking and financial inclusion – which were once optional, are becoming mandatory. This is precipitating cultural, operational and process change across the banking organisation.

How do these regulations affect end consumers? For one, they de-risk the financial portfolio by ensuring that banks offer only transparent and sound products, especially to their retail customers. Fair and uniform pricing is also implicit. Second, they improve the overall safety of customers’ finances through deposit guarantees, prudent credit norms, KYC/AML clearances and the like. Third, the call for greater transparency and disclosure creates customer awareness, confidence and empowerment.

Financial inclusivity has a far reaching impact on the lives of those it brings into the banking fold. The poor and marginalised sections can now enjoy easy access to financial products, unthinkable even a few years ago. This is sparking a socio-economic revolution in villages by giving rise to a savings culture, fiscal responsibility, freedom from moneylenders and the empowerment of women.

With the global watch on climate control and environmental issues, the greening of banking is a given. Environmentally responsible practices benefit customers both directly and otherwise – for example, digital statements and remote global advisory services make life convenient, but a sustainable lending policy contributes to the overall well-being of the planet and its citizens. Ethical banking soothes the collective conscience by channelling funds into only those investments that respect human rights, environmental health and safety, social justice and animal welfare, for instance. A leading co-operative bank in the UK has gone so far as to let customers dictate its ethical policy. What could be greater proof of the impact of emerging regulations on consumer interest?

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A Finextra member
A Finextra member 24 August, 2010, 18:40Be the first to give this comment the thumbs up 0 likes

Was on a flight back from Houston the other night. Sitting next to me was someone who had been associated with the banking industry for many years, initially as a banker, then as a vendor, and finally as a consultant. We got talking - and pretty much as many conversations about banking end up nowadays, we talked about the impact of regulation and what it holds for the community at large.

My co-passenger was quite emphatic, no doubt spurred by his many years of experience and the multiple hats he had worn in that time - he felt that emerging regulations would be very good for everyone. Period. No hesitation, no doubts. It was as emphatic a view that one has heard off late. He felt that banks would become more responsible (which is good for their customers), that vendors would be cautious before they sold (which he felt is good for the banks) and regulators would be both cautious and responsible - cautious because they cannot afford history to repeat itself and responsible because they realize that while they should regulate they should not stifle responsible and genuine business (which is good for bankers, customers, vendors...well, just about everyone). Why fear regulations, he said, we should welcome it!!

He spoke so passionately that at one stage the stewardess paused to listen to him as she stopped by to offer a refill of the wine glass. Now, I am sure she has a bank account somewhere....and that between transatlantic flights and time at the airport, banking regulations will impact her life too in some way. Some responsible way, hopefully.        

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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