Trends in fair, responsible, and inclusive banking
Over the past decade, regulatory changes, technology, and innovation have heavily shifted how financial services organizations operate, impacting how they offer, market, and service their products. Financial Services organizations have experienced structural transformation driven by digitization, where products and operations have experienced technological advancements. Simultaneously, digitizing and democratizing financial services have resulted in additional socio-political expectations requiring more access to financial information for customers and enhanced focus on social responsibility initiatives. The spotlight on fair, responsible, and inclusive banking practices has never been brighter.
Regulatory pressures
Regulators are increasing their enforcement and scrutiny of organizations, especially regarding consumer protection, accessibility, and discrimination. In October 2023, it was reported that the Consumer Financial Protection Bureau (CFPB) announced an increase in enforcement of 50 percent.1 Proposed changes to the Unfair, Deceptive, Abusive Acts, and Practices (UDAAP) regulations under the Dodd-Frank Act, Community Reinvestment Act (CRA), Section 1071 of the Dodd-Frank Act, Web Content Accessibility Guidelines (WCAG), Americans with Disabilities Act (ADA) and Limited English Proficiency (LEP) guidelines are designed to enhance and promote equality in the products and services offered by organizations. Regulators have launched multiple initiatives around fairness as part of their emphasis on fair competition.
A majority of chief compliance officers (CCOs) polled by KPMG in 2023 anticipate a heightened emphasis on compliance due to growing regulatory expectations and scrutiny, with the primary push for improvement coming from their boards and regulatory authorities.
53%
Pressure to enhance compliance from boards
49%
Pressure to enhance compliance from regulators/examiners
34%
Pressure to enhance compliance from customers
27%
Pressure to enhance compliance from social policy/public perception
Source: KPMG Chief Compliance Officer Survey (2023)
Charting a course toward fair, responsible, and inclusive banking
Financial services organizations should consider embodying fair banking principles and ethical practices as regulations evolve and the industry continues to digitize products and services. Customer-centric approaches prioritizing diverse populations’ needs and preferences are critical, as is providing accessible information, transparency, and security to promote consumer trust and foster equitable financial services.
Explore our POV that covers critical areas to consider prioritizing to improve fair banking practices.
Footnote:
1Source: American Banker “CFPB plans to hire 50% more enforcement attorneys, support staff” (October 5, 2023)
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Trends in fair, responsible, and inclusive banking
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