2024 Global financial services regulatory outlook 2ContentsContactsIntroductionDigitalization of finance and greater use of artificial intelligenceThe digital asset ecosystemEnvironmental, social and governanceConsumer impactFinancial crime Operational resilienceNew prudential developmentsResolution and recoveryBoard and management oversightSupervisory effectiveness3IntroductionPolitical and economic issues are creating a more complex environment for financial services regulators in 2024. Geopolitical tensions have increased over the past few years, amid deteriorating diplomatic ties between the United States and China, war in Ukraine, conflict in the Middle East and tensions in Africa — a possible harbinger of greater financial segregation. Many countries are regulating data, technology and climate issues in ways that follow national agendas and add layers to this complexity. Running a global organization has required the ability to tailor a generally consistent business model to the needs of individual markets. That tailoring is becoming increasingly important in terms of people, processes, data and technology. In some cases, the pressures may force organizations to become more focused and aligned to one set of markets. At the same time, an uncertain economic outlook —characterized by rising energy costs and stubborn inflation in some jurisdictions, which could lead to higher customer indebtedness levels — is raising questions about asset quality in 2024. Several high-profile bank failures are also leading to increased scrutiny both of financial services firms and the regulatory bodies that oversee them. These challenges impact the regulatory outlook for 2024.This year we highlight nine priority topics driven by a mix of events and longstanding regulatory interests.Regulatory and supervisory focused priorities have become heightened due to recent market events, including prudential, resolution and recovery, board and management oversight and supervisory effectiveness. Other priorities include consumer impact, environmental, social and governance (ESG), digital assets, digitalization of finance (payments and artificial intelligence or AI), financial crime and operational resilience.We highlight where firms should focus their attention in relation to the priorities identified for 2024.4New prudential developments Following the banking volatility of 2023, authorities will be recalibrating both regulation and supervisory approaches. Recent events underline the threats to viability at firms with significant conduct and reputational challenges in times of stressed market sentiment, even if prudential requirements appear satisfied. Although global authorities do not show any intention to move toward a zero-failure regime, they may need to reassess the risk of contagion arising from the failure of non-systemic institutions, while at the same time managing the potential moral hazard accom...
