As financial institutions advance into the next decade, several forces are expected to impact the financial and business world. Below are some of the most important trends in banking and compliance to be aware of in 2025.
Evolving Regulatory Landscape
Recent surveys reveal that businesses expect changes in key areas such as cybersecurity, data privacy, economic and social governance, as well as changing domestic regulations. New digital information systems regulations and consumer protection policies are on the rise across Asia. With the world changing more rapidly than ever, compliance professionals have an increasingly important role in ensuring businesses operate according to local laws.
Central Bank Digital Currencies (CBDCs)
In the global economy, regulated digital currencies are gaining traction. Central banks across over 130 countries are exploring the adoption of digital currencies, with half in advanced stages of development. The emergence of CBDCs is expected to integrate traditional and digital markets by extending the reach of government policy. However, this new avenue of exchange may bring about fresh governance challenges for businesses seeking to adopt blockchain technology.
Global Fragmentation
Recent geopolitical developments have begun to shift the global economic paradigm, creating diplomatic tensions and encouraging protectionist policies. The new administration in the United States has created uncertainty amongst allies and partners, while Russia is seeing strained diplomatic ties due to the ongoing conflict in Ukraine. Changes in the political environment may also bring complex issues for firms looking to strengthen ESG and sustainability policies.
Generative AI in Banking
The development and proliferation of generative AI continues to accelerate, with banking positioned as a major field for potential application. With benefits such as improved accessibility and hyper-personalised services for customers, many banks are incorporating AI into their operations with the expectation of improved efficiency and reduced costs. As with new technology however, compliance risks remain in areas such as implementation and data security.
Rise of AI-Powered Financial Crime
Generative AI is also facilitating new forms of financial crime. Efficiency gains from the technology are driving more innovative criminal methods. With new automated processes scaling up illicit operations, perpetrators are able to target a larger pool of potential victims. Financial institutions will face evolving regulations and safeguarding measures, which in turn may struggle to keep pace with the increasing scope and complexity of these financial crimes.
Majority of Companies Cutting Compliance Costs
Despite challenges in the field becoming increasingly sophisticated, organisations are looking to reduce compliance costs. This development correlates with an increasing trend toward automation, which is potentially driven by high labour expenses. This was cited as a primary cost driver for APAC institutions in 2024. Firms looking to future-proof compliance processes are recommended to engage professional advisory services on selecting and implementing RegTech solutions.
Environmental Concerns
Global risks posed by environmental changes grow in severity with each passing year. Potential dangers include weather events, ecosystem collapse, resource shortages, and pollution which have far-reaching effects. Consumer-driven demands for improved environmental, social, and governance policies (ESG) are anticipated to arise in response to growing concerns. Organisations will need to be prepared for increased regulatory changes together with those of the natural environment.
Cybersecurity Risks
As the global digital landscape becomes increasingly connected, vulnerabilities will also emerge exposing individuals and institutions to greater risks. Cyber-attacks, ransomware, and extortion are among growing concerns for small and medium enterprises (SMEs), which may not be equipped to manage cybersecurity threats. These incidences highlight the importance of awareness and education in an increasingly digital world.
With several developments affecting the financial sector, compliance challenges are predicted to become increasingly complex. At the same time, ethical and responsible conduct will become imperative for businesses going forward. JFourth Solutions is driven to provide the guidance and expertise necessary to meet those challenges, ensuring no one is left behind.
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