In this blog we will be exploring the Asia Pacific regulatory compliance environment, both current and future, to get a sense of the context within which Asia Pacific financial institutions are doing business.
The APAC Regulatory Compliance Context
Analysis from EY reveals that the Asia Pacific region is in a state of flux from both inter and extra-regional forces, bringing challenges as well as opportunities for financial institutions who can handle the heat.
- ASEAN: as markets in the Asia Pacific draw closer together, financial institutions will need to be ready to adapt to changing competitive, as well as regulatory pressures to retain existing, and win new, market share.
- Digital Transformation: although a common pressure for financial institutions globally, the huge potential in the Asia Pacific as one of the most mobile regions in the world, means that financial institutions must constantly innovate their products and services to stay relevant, or risk being pushed out by an incumbent with the agility to move with customer and regulatory demands. Innovation of this magnitude comes with huge opportunities, but also the potential for complexity and risk.
- International banks rationalizing and heading home: a continued fallout of the Global Financial Crisis, large international financial institutions are packing up shop and heading home to regroup, leaving opportunities for Asia Pacific-local institutions to profit from their absences. This relates to the Digital and Business Transformation point above.
- Extraterritoriality: a trend, started by the US, in which a state’s national regulatory and reporting framework/legislation can be enforced outside its own borders, which has spawned a deluge of reactionary policies across the world, including in the Asia Pacific.
- Know Your Customer/Anti-Money Laundering: traced back to 9/11 and the need to prevent the financing of terrorism, which has resulted in far stricter identification and reporting requirements across the world.
Financial institutions in the Asia Pacific must find ways to not only understand, but manage the operating and regulatory complexity generated by the interaction of these pressures. To gain top market position in one of the most populous and high-growth regions in the world, simplifying and systematizing regulatory and compliance requirements is essential to growth and adaptation for financial institutions.
The Asia Pacific region presents unique challenges and opportunities for regulatory compliance within financial institutions. The next blog will explore these specific organizational challenges resulting from this complex mixture, and current methods of managing the risks and opportunities they present.
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