Standard Banking, Trends

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Consumer Standard Banking: Legal and Regulatory Analysis

Banking laws differ in every country, region, territory, and jurisdiction in the world, though some laws and regulations apply to multiple regions’ banking institutions. Laws and regulations have changed since the 2008 global financial crisis, becoming stricter on banking policies and processes, instituting more data privacy rules and protections, and decreasing opportunities for money launderers and tax evaders.

International Banking Laws & Regulations

  • Research shows that the primary way to determine commonalities in banking laws across the globe is to review the laws of each country (or region, like the EU) to understand the similarities. The laws for each region (and often, each country) are detailed and complex (as well as ever-changing in some cases), and there does not appear to be a site that collects them all or any research conducted into the most common laws. One of the most current / recent collections of these laws is a two-book set from Thomson Reuters titled “International Banking Law & Regulation.”
  • Some research has been collected from experts like HSBC, which tracks financial system regulations around the world. They have recent news on four sectors of global financial system regulations: market structure, bank structure, tax transparency, and capital and liquidity.
  • For market structure regulations, they note that many regions are establishing “regulation for derivatives to improve transparency and risk.” These include (by region): European economic region: these regulations include the EMIR, AIFMID, UCITS V, MAD, and MiFid; US: Dodd-Frank Act Title VII; Hong Kong: specific trade reporting; as well as similar reforms throughout Latin America and Asia.
  • For bank structure regulations, they note that regions are instituting “structural reforms designed to address new regulations to protect customers and taxpayers.” These include (by region): US: Dodd-Frank Act Volcker Rule; UK and EU: general structural reform.
  • For tax transparency regulations, they note that the Foreign Account Tax Compliance Act (FATCA) “is the implementation of the G20 commitment by the United States,” and its impact is spread across the world, and that more than 100 countries, territories, and jurisdictions “have also enacted measures to address tax avoidance, known as the Common Reporting Standard for the Automatic Exchange of Financial Information (CRS).”
  • For capital and liquidity, most regions are strengthening “bank capital requirements and [increasing] bank liquidity reserves to drive down systemic risk.” The Basel III Accord has been implemented in many countries already, including Hong Kong. In the EU, the Capital Requirements Directive (CRD) IV will implement Basel III requirements.
  • According to HSBC, the financial crisis in 2008 caused many governments around the world to “push for financial reforms designed to provide greater transparency of transactions and reduce risk in order to make financial systems more stable and better regulated, and to make global markets safer.” Additionally, new bank structure and capital rules have been implemented with the intention of strengthening “resilience to any future financial crises and to provide greater consumer protection.”

Global Banking Proactive Regulatory Management

  • Research from PWC notes that, due to recent events (both country-specific and global), “governments and regulators are increasing levels of scrutiny and are increasingly penalty-minded.” Regulators want banks “to embrace regulatory intent, and create sound, secure, unbiased businesses, where regulatory compliance and sound conduct is embedded in the processes and values of everyday operations.”
  • Regulators and governments want banking regulations streamlined and built into typical banking processes, “not just the responsibility of the compliance group(s).” However, PWC notes the challenges in this as regulatory items are handled differently by different agencies within the same financial institutions, all “leading to inconsistent understanding of regulatory implications, lack of clarity around firm-wide decisionmaking, and inefficiency and duplicative processes around the bank.” To address this, they recommend that global banking institutions have a “strong global regulatory lead and team” that oversees all activity bank-wide, and that this will enhance accountability, clarify consistency in messaging, and proactively address relevant issues.
  • According to research by McKinsey, globally, many “legal and compliance departments are automating the extraction of data from documents and using algorithms to triage suspicious patterns for manual review,” and using other innovative technologies to automate related processes.

Countries w/ Highest Banking Secrecy Laws

  • Switzerland tops the list of the countries with the highest banking secrecy laws. The country has more than 400 banks, and a long tradition of protecting banking assets for its clientele (stemming back from protecting assets during WWII). As this country is not part of the EU, they are not required to follow EU banking laws.
  • The Seychelles comes in second on this list; though there are only 10 different banking institutions, each of them has a variety of branches throughout the area. This country “supports the right to privacy of both domestic and foreign nationals,” and opening an account either as a citizen or a corporation is easy and takes very little time. They do not report interest income to national authorities.
  • Luxembourg is third on the list for banking secrecy; they have nearly 150 banks throughout the country. Banks in this country respect the privacy of patrons, and have laws stating leaks are punishable with prison terms.
  • Other areas on the list that are tops in banking secrecy are the Cayman Islands, Samoa, St. Lucia, the US, Bahrain, Hong Kong, Panama, Singapore, and Belize.

Additional Regulatory Landscape & Recent Changes

  • Some regulatory changes (recent and current) from various regions and countries affect banks in other regions. Some of the most notable ones from the European Union, the United States, Canada, the UK, Brazil, Thailand and more have been included (as examples) below.

European Union

  • The European Commission created the “High-level Expert Group (‘HLEG’) to examine possible reforms to the structure of the EU’s banking sector.” In 2014, their reform proposal was released as draft regulation, and included a suggestion to ban “proprietary trading and the separation of high-risk trading activities from banks’ core services,” among other recommendations.
  • The proposed structural regulations were partnered with recommendations “to improve the transparency of shadow banking,” and provided measures aimed at enhancing “regulators’ and investors’ understanding of securities financing transactions (STFs).”
  • The PSD2, or Payment Services Directive 2, was expected to go into effect in September 2019, but was extended to December 2020 by the European Banking Authority. This regulation includes criteria that provides for more-secure customer authentication processes, provides for transaction-based risk analysis “to deter fraudulent payments,” adds dynamic linking to authentication, and increases mobile app security.
  • Also in the EU, the Anti-Money Laundering Directive 5 (AMLD5) is a primary regulatory item. The fifth version of this regulation was adopted in July 2018 and went into effect in January 2020. This version identifies “virtual cryptocurrency exchanges (VCEPs) and custodian wallet providers (‘CWPs’) as ‘obliged entities’ subject to EU regulations.”

United States

  • The Volcker Rule of the Dodd-Frank Act imposes a variety of restrictions on financial institutions, “most notably the prohibition of proprietary trading.” Banks could no longer engage “in short-term proprietary trading of specific financial instruments for their own account,” nor could they own, sponsor, or partner with “hedge funds or private equity funds.” These regulations took effect in 2014 with implementation spanning to 2016.
  • Changes are coming in 2020 to the Safeguards and Privacy Rules of the Gramm-Leach-Bliley Act. This act “requires financial institutions (FIs) explain to their customers the organization’s information-sharing policies and practices and to safeguard sensitive data.” These regulations require banks to implement customer data security measures, and to ensure all bank affiliates, partners, and service providers offer the same high-level of customer data protections.
  • The CCPA, or California Consumer Privacy Act, goes into effect in July 2020; this regulation was modeled after the EU’s GDPR (General Data Protection Regulation). The regulation applies to for-profit businesses that collect consumer data, and requires them to manage the data in specific ways and comes with steep penalties for non-compliance.
  • An overview of the regulatory and legal landscapes for US banking can be found in this detailed report from Global Legal Insights. An additional overview is provided via the Minneapolis Fed in this detailed report. A full list of every compliance regulation for US banking is offered here by Compliance Cohort.


  • In Canada, two major regulations take center stage. FINTRAC (Canada’s Financial Transactions and Reports Analysis Centre) has provided information and regulations for digital onboarding security that includes the support of various digital identification technologies. Additionally, beginning in June 2020, amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) take effect. These directly affect cryptocurrency exchanges, changing their classification to MSBs (money service businesses).

The UK

  • Structural Reform took place in the UK with the Financial Services Banking Reform Act of 2013, which was aimed at imposing “higher standards of conduct on the UK’s banks.” One of the biggest reforms was the enactment of ring-fencing separating retail banking from wholesale banking and investment banking divisions.


  • Brazil’s General Data Protection Law (LGPD) takes effect in August 2020; this regulation is modeled after the EU’s GDPR and “applies to any individual or legal entity (regardless of where they are located) that offers or supplies goods or services to Brazil, processes data in Brazil, or processes data collected in Brazil or belonging to Brazilian individuals.” It calls for the adoption of “administrative, technical, and security measures” that protect consumer data; the technical standards of the act will be published before they go into effect.


  • Thailand’s Personal Data Protection Act BE 2562 goes into effect in May 2020; this regulation was influence by the EU’s GDPR, but has a country-specific conceptual basis. It calls for consumer consents, the solidification of customer data practices into categories (with consent obtained for each category), and affects both Thai users and those who process Thai resident data (including global and regional banks servicing the area).

Multiple: 37 countries & 2 Regional Organizations

  • The FATF, or Financial Action Task Force, set standards that provided guidance on digital identities as they relate to financial institutions, governments, and other organizations. The guidance “focuses on end-to-end digital ID systems which encompass the processes of identity proofing, enrollment, and authentication,” and provides a selection of benefits for utilization. Two regional organizations, the EU and the Middle East Gulf Cooperation Council, as well as 37 countries/jurisdictions are expected to adopt the regulatory guidance “to combat fraud, identity theft, money laundering, and terrorist financing.”
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Consumer Standard Banking: Economic Trends

Collaboration with RegTechs, open X ecosystem, and contextual banking are three economic trends that are impacting the consumer standard banking space.

Collaboration with RegTechs

  • Globally, banking regulatory standards are becoming more rigorous and complex, and the existing data handling processes and compliance of banks are generally insufficient to cost-effectively meet the requirements.
  • Banks pay a huge price for failure to comply with regulatory requirements on time. Fines levied on US and UK banks alone by regulatory authorities are expected to reach $400 billion by 2020.
  • Banks are partnering with regulatory technology (RegTech) firms to achieve faster testing and scaling of regulatory solutions.
  • RegTechs are using technology to attain complex regulatory standards more effectively to boost compliance.
  • Banks and RegTechs, as well as regulators, are creating consortia to build a collaborative ecosystem for better management of regulatory compliance.
  • ING and Commonwealth Bank are partnering with RegTech Ascent, which updates banks about regulatory changes and the impacts of regulation on their businesses using AI.
  • Union of Arab Banks has encouraged banks in their region to invest more in RegTech.
  • This trend is impacting the standard banking segment of the consumer banking industry because standard checking and savings banking products are subjected to regulatory requirements.
  • This is an economic trend because regulation creates public trust, making customers to confidently deposit money, thereby driving economic growth.

Open X Ecosystem

  • As the banking industry experiences service rebundling transitions, operational relief is achieved through open banking initiatives in the short-term.
  • However, as a result of customer demands which are constantly changing, as well as the dynamic landscape of the industry, open banking is expected to transform into Open X, an ecosystem of the future, that includes the participation of both traditional and non-traditional players.
  • The Open X ecosystem will enable banks to provide personalized products by leveraging data extensively, overcoming legacy thinking, and collaborating with other partners in the ecosystem to collect relevant information.
  • Operating in a collaborative marketplace will enable banks to attract a new customer base — the under-penetrated.
  • HSBC’s Connected Money app allows customers to "view their accounts at up to 21 different banks in one place". This is a reflection of how banks are starting to take advantage of the shared marketplace.
  • Wells Fargo partnered with Plaid, a data platform, to enable customers to use APIs in the management of their money in one place.
  • This trend is impacting the standard banking segment of the consumer banking industry because customers who use standard checking and savings banking products will be able to easily view and manage their finances.
  • This is an economic trend because as more customers are reached, banks would hold more financial assets, thereby driving economic growth.

Contextual Banking

  • In today’s world, consumers expect banks to predict their preferences and needs and offer personalized and contextualized products. Hence, the application of context to banking interactions and decisions is becoming more popular and profitable.
  • Banks are adopting new technologies and leveraging data to add value in the context of the needs of the customer.
  • A contextual banking database includes current and historical information of customers like time of day, location, payments, channel preference, web search history, product usage, etc.
  • The Commonwealth Bank of Australia (CBA) introduced its updated CommBank App 4.0 to provide personalization explicitly customized to the individual needs of each customer.
  • Singapore-based OCBC bank integrated Clinc’s interactive AI in its banking app to provide instant voice-enabled access to users' financial data.
  • Chatbots like TD Bank’s TD Clari and Olivia from Emirates NBD’s digital bank Liv focuses on making the banking experience more contextual, natural, and knitted into the everyday life of customers.
  • This trend is impacting the standard banking segment of the consumer banking industry because transactions involving standard checking and savings accounts would become easier to conduct through contextual banking.
  • This is an economic trend because as it becomes easier for customers to conduct transactions, the volume of transactions would increase and this can even attract more customers. Banks would hold more financial assets, thereby driving economic growth.

Research Strategy

The above economic trends impacting the consumer standard banking space were obtained from "Top Trends in Retail Banking: 2020" by Capgemini (consumer banking is also known as retail banking). We focused on the trends that are relevant to standard checking and savings banking products. Insights from Investopedia also show that these trends are economic trends due to their impact on the economy.

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Consumer Standard Banking: Technological Trends

Consumer banking, or retail banking, is rapidly being influenced by the rise of millenials and Gen Zers in the workforce who preference convenience and technology. It has been found that before opening a bank account, 61% of mobile banking users research a bank's mobile banking capabilities. Technological trends that are impacting the consumer standard banking space are primarily due to the rise in Artifical Intelligence. Open banking and robo-advisors are two emerging trends that are seeing worldwide recognition and adoption due to the innovation presented by adopting Artifical Intelligence technologies and applications.

The Rise of Artifical Intelligence

Most banks (approx. 80%) are aware of the cost savings from Aritifical Intelligence utilization, but they are mostly still in the planning phases on how to implement AI into their strategies. While there are opportunities for AI integration into all aspects of banking (conversational banking, anti-fraud, and underwriting), the retail banking spaces serves as the biggest opportunity to utilize the technology.
  • AI is predicted to have a cost savings for banks of $447 billion by 2023.
  • AI can be used for customer identification and authentication, live chatbots and voice assistants, customer relationships, and provide personalized insights and recommendations.
  • The use of AI is leading to less human interaction between customers and advisors which in turn is allowing more time for client advisors to conduct more value adding activities.
  • Improved systems will allow for mass customization on advisory and for banks to innovate in other ways.
  • Adoption of AI technologies is expected to lead to between a 20-25% savings across IT operations, infrastructure, maintenance, and development costs.

Open Banking

The majority of banks have online banking systems and mobile apps, but 53% of customers still deposit checks in person. There is now an emerging trend in countries such as the UK and Australia where customers can share their financial information with others in order to transfer money directly instead of writing a check. Open banking, as the trend is called, shares customers’ electronic data in order to complete monetary transfers.
  • Open banking regulations have been approved in EU countries such as the UK and in other markets such as Australia, Canada, New Zealand, Mexico, Argentina, Nigeria, Hong Kong, Japan, and Taiwan.
  • The process allows third parties to access customer bank data to collect account information or initiate payments.
  • Customers are looking for an easier, seamless banking experience.
  • Challenges include the policy and regulations on open banking, i.e. in the UK, banks are required to share their customer data with retailers, but banks cannot access retailers’ data.
  • Data security should be embedded in all mobile apps and technologies to ensure safeguard of customer information.
  • The Connected Money app by HSBC was launched in May 2018 in response to the UK's regulations on allowing customers more control of their financial data. The app allows customers to view various bank accounts, loans, mortgages, and credit cards in one place.
  • There is a potential for banks to increase revenue streams and expand customer reach if open banking is adopted.


Traditionally an in-person transaction, investment banking requires someone to provide advice on where to invest their money. There is now a rise in robo-advisors and artificial intelligence (AI) in money management. Advanced software and analytics can now advise investors on how to make profitable decisions and can help validate a banker's hypothesis. This trend has been emerging for a couple years and it has slowly been gaining momentum. The use of robo-advisors is particularly trending in the new and inexperienced investor market.
  • As of May 2019, there is less than $1 trillion assets managed by robo-advisors; however, it is predicted that by 2022, $2.2 trillion assets will be managed by robo-advisors.
  • In mid-2018, 58% of Americans stated they would use some form of a robo-advisor by 2025, and many respondents said they would be more likely to use robo-advisors over virtual reality, blockchain, and cryptocurrency.
  • Algorithms are used to invest in portfolios that are diversified across asset classes and market sectors.
  • Approaching a digital advisor is less intimidating to individuals who have never invested before. One main benefit in using robo-advisors for investors is the ability to take the emotions out of the process.
  • The trend captures young and new investors through digital platforms and offers encouragement on how much wealth can accumulated.
  • Wealthfront and Betterment, two leaders in the robo industry, now offer banking services along with their robo-advisors. By expanding their offerings, customers can earn higher interest on their uninvested cash.

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Consumer Standard Banking: Societal Trends

When it comes to the relationship between human behavior and finances, there is no shortage of research or material covering the subject. Below we outline several social trends that impact how people relate to banking, suggesting ways that these behaviors may also impact business. The three trends we highlight are fluid, borderless lifestyles, the move towards financial literacy, and the cultural expectation of seamless service. Finally, we close the key findings with the inclusion of an insightful study on the Western relationship with finances and banking, as undertaken by anthropologists and other behavioral scientists.

Fluid Lifestyle Beyond Borders

  • Various studies such as those completed by Cognizant and Accenture indicate an emerging trend that encapsulates both human behavior and a specific "type" of banking consumer. Accenture refers to this type of consumer as the "nomad" while Cognizant identifies this behavioral trend as a "fluid lifestyle."
  • Consumers with this nomad lifestyle seek "computer-generated support" and are open to non-traditional services. Their fluid lifestyle often means they change careers, move to different countries, and are overall more digitally in-tune. With the rise of digital nomadism, remote work, and opportunities to live and travel abroad, consumers need banking options that are as borderless as they are. Certain features of this lifestyle have huge implications for banking, as consumers need and desire digital options and creative banking-relationship solutions to suit international lifestyles.
  • Additionally, consumers who exhibit this style of fluid behavior are less likely to be loyal to financial institutions, creating the opportunity to form relationships on the basis of long-term needs such as investing, insurance, or saving for retirement. According to the survey by Cognizant, 90% of consumers feel that banks are only transactional, and only a quarter of those consumers report that banks demonstrate interest in their long-term needs.
  • Transferwise, which began as a fintech company offering low-fee international transfers between banks, has now morphed into a company that operates like a bank, offering members borderless bank accounts. Valued at $3.5 billion in 2019, Transferwise has experienced huge success, which it attributes to paying attention to this trend of serving the millions of consumers traveling, working, and living abroad.
  • There are now more than half a million people who bank with Transferwise's borderless account. According to Transferwise, this success is the result of targeting something that traditional banks have not done well—international transfers.

The Move Towards Financial Literacy

  • The recognition of the need for financial literacy is rising globally, with many reputable sources like Forbes reporting the need for consumer financial literacy and the growth of this trend, particularly as fintech looks to tackle this issue more and more with creative ways to educate people on their finances. Fintech companies in particular have been increasing exponentially since 2008. Some of the most recent numbers indicate that only 35% of men and 30% of women globally may be considered financially literate.
  • Research carried out in The Netherlands and published in late 2019 finds that financial literacy has important implications for trust in financial institutions, which then has positive outcomes for banks. The researchers found that consumers who have greater financial literacy also have greater trust in banks and other financial institutions. The report points out that trust is significant for financial institutions because low levels of trust "undermines financial stability" and may "damage the financial services industry." Furthermore, less trust equates to less loyalty.
  • The research report also mentions previous research that shows how lower trust in financial institutions leads to a preference for liquidity. These consumers are less likely to have various savings accounts.
  • This research clearly outlines the impact of financial literacy and trust in The Netherlands. The scholars show that policies concerned with increasing financial literacy and trust in financial institutions are significant for the health of the financial industry. Literacy is linked to trust that banks will be able to return money to the consumer, that insurance companies will pay insurance claims, and pension benefits are secure, thus increasing the likelihood that consumers will invest in these services. Consumers are also more likely to trust the supervisors and managers at these institutions.
  • Finally, another study in Iran demonstrated that financial literacy has a positive impact on the use of digital banking and the overall economic health of consumers.

The Cultural Expectation of Seamless Service

  • As a result of the world becoming increasingly digital, consumer behavior with regard to banking demonstrates significant cultural shifts. Prime among these is the expectation that industries and services are both connected and seamless. Financial expert Jim Marous outlines how the "connected lifestyle" of consumers impacts the experience with financial services. According to Marous, connectectedness between apps and services leads consumers to expect immediate and seamless transactions between apps and banking.
  • For the financial industry, these expectations require "developing better digital channel solutions," a frictionless purchasing process, the opportunity to open an account digitally, the connection between social media and banking institutions, and the use of voice banking if institutions want to stay relevant and move at the same pace as their consumers. Marous explains that financial institutions risk being left behind in favor of other more forward-thinking institutions who adapt to the cultural trend of seamless connection between various aspects of the consumer lifestyle.
  • This instant, seamless service is expected by consumers, who also desire this trend to carry over into the customer service space. A consumer banking survey shows that 41% of consumers would leave their bank if they receive poor customer service. Consumers must be able to stay connected with their financial institutions, and this includes "apps, chatbots, social media, and email."
  • Facilitating easier connections, as with voice command, has proven to be successful for Bank of America. In 2019, after only one year of being active, Bank of America's voice command assistant Erica helped clients process over 50 million requests, and is being used by 7 million people. Not only has this feature saved time (and money) for Bank of America, but it has "delighted" customers and saved them time as well.

The Future of Money White Paper

  • Anthropologists and other social scientists have prepared an insightful report after having carried out an ethnographic study of the relationship English, German, and American consumers have with banking. While the report may not be organized according to societal trends, it provides an excellent cultural analysis of human behavior as it relates to banking and serves as a foundation for understanding consumers.
  • The conclusion of the report is that financial institutions primarily lack the "human touch" needed to connect with consumers today, particularly when it comes to services beyond the basic transactions of depositing paychecks or making purchases.
  • The report differentiates between "fast money" and "slow money," advising financial institutions in ways they may serve their customers more and gain trust with "slow money" (investments, retirement, etc).


From Part 04
  • "“We came back to this idea and we realised there are hundreds of millions of people who work, live or study abroad, and we realised we could help them too.”"
  • "TransferWise now serves more than five million customers just like Thompson and myself, processing four billion UK pounds each month, via its money transfer service and increasingly popular borderless accounts, available to both individuals and businesses. “Banks are very good at a number of things, but something they have never done well is international transfers,” says Thompson."
  • "While the borderless account – of which there are now more than half a million – has been a huge success, allowing people to transparently send money from bank account to bank account is still TransferWise’s core business."
  • "Some organizations have already built applications for voice banking, most notably USAA, Capital One and Bank of America. As with many technologies, the applications are relatively basic without much artificial intelligence (AI) benefits provided. Eventually, it is expected that voice-controlled devices may become an intelligent concierge, where recommendations in banking and beyond across an entire consumer’s lifestyle."
  • "In addition to becoming accustomed to new ways to connect through voice-activated devices and mobile phones, the consumer is increasingly expecting seamless interactions that result in close to immediate satisfaction. Where in the past, consumers would be patient with the availability of products and services they wanted, the desire for simple purchasing processes and lightning-fast delivery is changing the business models across all industries."
  • "Consumers are increasingly frustrated with ‘friction’ in a buying process. This includes long forms, lack of transparency and the inability to complete an entire transaction digitally. Financial organizations will be expected to provide end-to-end account opening capabilities without the need to visit a branch office. Very soon (if it hasn’t happened already) a significant percentage of consumers will make purchase decisions based on this capability."
  • "“More than half of consumers (54%) report using social media as part of their purchase journey in come capacity, whether it’s to browse, research, gain inspiration or purchase,” according to the Walker Sands report. "
  • "Using fourteen years of data on Dutch consumers’ trust in financial institutions, we find that financially literate consumers are more likely to trust banks, insurance companies and pension funds, and the competence and integrity of the managers of these institutions. This holds both for broad-scope and narrow-scope trust. Although trust in respondents’ own financial institutions is significantly higher than general trust in financial institutions, both forms of trust are positively related. "