Issues impacting businesses in Financial Services
Transparency and compliance high on the agenda
APRA continues to roll out significant and concurrent regulatory reform across the financial services sector, increasing the pressure on regulated entities to keep pace with change.
Key areas of focus include:
- the implementation of the Financial Accountability Regime (FAR)
- cyber risk and information security
- operational resilience and risk management
- financial reporting and transparency requirements
FAR is expected to optimise risk management and governance across banking, insurance and superannuation. Alongside this, ASIC has introduced new enforceable requirements around financial reporting and transparency.
Preparing early to ensure compliance will be key to meeting changing regulatory expectations.
Technology and innovation at your fingertips
Innovation is at the centre of financial services, driven by regulatory change, shifting consumer preferences and rapid technology transformation.
This is helping organisations:
- become more competitive
- manage data more effectively
- make more informed decisions
- create more tailored products and experiences
From AI-driven personalisation and streamlined operations to open banking and improved risk management, there is a wide range of innovation opportunities available.
At the same time, recent data breaches have sharpened the focus on cyber security and operational resilience. Financial institutions need to stay on top of requirements including APRA’s CPS 234 and CPS 230, while adopting technology in ways that strengthen oversight and support effective risk management.
Fintech’s growth and market potential
Fintechs range from digital-only banks to technologies that streamline, digitise or disrupt traditional financial services. As one of the fastest growing parts of the sector, fintechs continue to create significant market opportunities.
Growth is being driven by:
- strong demand for 24/7 access to finances
- digital-first customer expectations
- expansion into new products, sectors and markets
To thrive, fintechs need robust growth plans and innovative strategies. They must also respond to ongoing challenges around talent, capital access and regulatory change, with operating models that can keep pace with increasing demands.
Governance and regulatory reforms in the banking sector
Regulatory reform remains one of the largest challenges facing the banking sector.
Domestic banks, credit unions and mutuals are navigating:
- slowing private sector capital expenditure
- multiple regulatory reforms
- changes to capital frameworks
- new accountability and reporting obligations
One of the most significant post-Royal Commission changes is the shift from BEAR to FAR. Transitioning to FAR will require significant planning, a strong understanding of new responsibilities and accountability obligations, and governance arrangements that are fit for purpose.
Significant reform to private health insurance
Private health insurance has already faced a number of pressures, including restricted growth, rising premiums and perceptions of poor value, particularly among younger members.
The sector now faces further change, including:
- broader health sector reform
- heightened prudential expectations
- stronger risk management requirements
- pressure to improve member experience
To remain competitive, PHIs need to optimise member experiences, leverage emerging technologies and provide flexible service offerings, while maintaining strong risk and control environments.
Transparency and performance are the keys for superannuation
Transparency, performance and accountability remain front of mind for superannuation funds, employers and members.
Key areas of focus include:
- ongoing reform across the sector
- stronger expectations around accountability
- net zero commitments by 2050
- growing ESG investment options
In this environment, trustees and executives need clear visibility over compliance and member outcomes.
Asset Management continues to be reshaped by reform and changing expectations
Asset managers are navigating increasing regulation, margin compression and investor demands for returns and transparency in a more demanding global environment.
Key pressures include:
- downstream impacts from superannuation reform
- annual testing of transparency and performance
- growing investor expectations
- continued evolution of ESG integration
This is increasing the need for reporting and compliance approaches that are both efficient and robust.
Australia’s shift to instant payments
Australia’s shift to real-time, instant payments is reshaping the financial landscape by phasing out traditional methods like cheques and direct debits.
For businesses, this means adapting systems and processes to support:
- instant transfers using mobile numbers or email addresses
- stronger operational efficiency
- security and compliance requirements
- reduced reliance on legacy systems
While new payment infrastructure requires upfront investment, it can improve cash flow, reduce operational costs and help maintain a competitive edge. It also requires implementation that is well controlled and practical to deliver.
