“It’s hard to argue against protecting depositors and policyholders and ensuring the soundness and stability of the global financial system,” says Deloitte. “But it comes at an enormous cost.”
Deloitte says a negative view of regulations could cause financial institutions to pull out of global markets and focus domestically. That would slow capital’s flow into the markets, and could harm innovative companies looking for financing.
Instead, firms should take a proactive approach to regulation and see a strong compliance culture as a way to stand out.
Deloitte suggests these strategies:
- Use compliance to find new ways to do business. Companies that have a deep understanding of the new rules can use them to develop new products.
- Use capital efficiently. Now that many firms have higher regulated capital reserves, there’s less capital to invest in new lines of business. It’s time to take a hard look at which projects continue and which are abandoned.
- Embed compliance throughout the business. Compliance officers should be empowered to collaborate with colleagues. They’ll be able to help identify new opportunities for the firm.
- Think ahead of regulators. Embedding compliance into the business also helps prepare the firm for future rule changes.
- Work with regulators. Help regulators foresee and solve potential risks to the stability of the system.
Read more on regulations here.