The Factors Changing Regulatory Change Management in 2021

The past two years have been exceptionally turbulent for regulatory change managers, and the next two years promise to bring about even more changes. The pandemic completely changes regulatory and reporting requirements and forced businesses to rework their modus operandi. The year 2021 has seen the end of the pandemic in most places, but there are many other factors still causing a lot of changes in the regulatory frameworks that financial organizations must abide by.

The biggest forces acting on the regulatory framework include:

New Administration

There is a new administration with robust party representation in the House and Senate. This gives the current government enough leeway to more easily pass changes to the regulatory framework. The recent executive order by the White House lays out some of the changes that are planned by the current government. Businesses will have to keep a close watch on the latest announcements by the government to ensure that they can anticipate not just regulatory changes but also the overall regulatory approach the government will take for the finance sector.

Recovery from the Pandemic

The pandemonium that businesses and society had to deal with in 2020 cannot be overstated. The pandemic was an unprecedented event in modern history and resulted in many losses. The good news is that the pandemic is mostly under control now and the economy is quickly recovering. However, not everything will be the same. The shutdowns during the pandemic changed the way businesses operate and some of these changes may continue to be present long after the pandemic has ended.

Work from home policies in businesses are a great example. Many businesses are now planning to permanently have employees work from home. Many businesses also started delivering services through alternate digital channels – those will continue to operate because customers found them to be convenient. This means that regulations may change to reflect these changes, and regulatory chance managers will have to reassess the policies and SOPs in their organizations.

Fintech

Fintech apps and services are now being used by the public at large which has resulted in increased regulatory scrutiny about how they operate. Many fintech apps and services are also integrating their services into the banking network to provide more services to their customers. All the financial regulations that have been in the books for decades were designed for traditional financial businesses such as banks, mortgage lenders, insurance businesses, investments houses, and other businesses in the financial sector. Fintech services are a disruption for the industry and will result in many regulatory changes.

The turbulence and lack of predictability in the future of the regulatory framework means that instead of preparing for specific changes, businesses need to focus on the flexibility and responsiveness of their regulatory frameworks. Click To Tweet

Cannabis Industry

It will become more difficult for banks to retain their existing posture on providing financial services to cannabis businesses as a growing number of states move toward legalization. Most banks were operating according to federal regulations and mandates, but if the present rate of legalization continues, cannabis will be legalized in more than half of the states in a few years. Banks will not want to miss out on this growing market and will have to reconsider their strategy. Legalization does not seem to be happening soon at the federal level, which means businesses will have to adapt to the different regulatory landscapes present in different states.

Brexit

The Brexit agreement was finalized at the end of last year, and the United Kingdom is no longer a member of the European Union. This has a big impact on the financial sector, because a lot of companies, including a lot of US companies, have their European headquarters in London, as well as the rest of the United Kingdom.

Brexit will continue to play a major role in the regulatory landscape as the financial sector adapts to the new rules and challenges poised by the UK leaving the EU. American businesses will need to rethink their European strategy. UK was a natural fit for most American companies because it was the financial center of the EU. Businesses will now have to consider whether they should relocate their European offices or deal with the new regulatory challenges posed by Brexit.

Preparing for Regulatory Changes

The above forces are just the biggest forces – there are many more factors that are shaping up the next few years to be some of the most exciting years for regulatory changes. While this will pose a challenge for regulatory change managers across the country, it will also bring about new opportunities to capitalize on.

The turbulence and lack of predictability in the future of the regulatory framework means that instead of preparing for specific changes, businesses need to focus on the flexibility and responsiveness of their regulatory frameworks. Regulatory change management technology can help businesses create dynamic frameworks that can quickly react to any changes.

Interested in seeing how your organization can benefit from RCM technology? Get in touch with our regulatory experts to see a demo of Predict360 in action. Want to learn more about the latest regulatory developments and what they mean for the financial sector? Attend our complimentary webinar Keeping Pace with Regulatory Change Management: Mid-Year Review & 2022 Forecast.