In a recent interview with John Lothian News, Tracy Moore, director of thought leadership and regulatory affairs at Fenergo, explored the complexities and ramifications of Basel III regulations on the banking sector. Moore, with her extensive experience in regulatory compliance and financial technology, provided insightful perspectives on how Basel III could reshape banks’ operations and strategies.

Moore said that Basel III is not merely about compliance but is pivotal in building a resilient and sustainable banking ecosystem. She said that these regulations would necessitate a closer engagement with industry experts and collaboration among banks to adapt effectively to the changing regulatory landscape.

Moore said that technological advancements, particularly in regulatory technology (regtech), are key to enhancing banks’ compliance capabilities. She stressed the importance of adopting such technologies to remain competitive and meet regulatory requirements efficiently.

Moore pointed out that adapting to the extensive calculation requirements for capital would be particularly daunting. This adjustment demands more sophisticated risk modeling, representing a significant shift in operational focus for many institutions, she said.

Moore also mentioned the potential for unintended consequences, such as the demand for specialized compliance services that could stretch the capabilities of firms like Fenergo beyond their traditional offerings. This scenario, she noted, could spur technological innovation as the industry seeks to meet these new demands.

Moore said she expects regulators to be strict yet patient, recognizing the multitude of new regulations banks are currently facing. She said she advises banks without a concrete plan to start immediate preparations, emphasizing strategy development and open communication with regulators.

Moore believes that the increased transparency resulting from compliance could reveal both gaps and strengths within the sector, possibly prompting mergers and acquisitions.

Moore said that banks must be proactive in assessing technology and data infrastructures, and Fenergo has been advising banks on the strategic investments needed to navigate these regulatory changes effectively.

In the buy versus build debate, Moore said she observed a growing trend towards third-party suppliers, citing their efficiency, expertise, and the ease of integration offered by cloud and SaaS technologies as compelling reasons for banks to seek external support for regulatory compliance challenges.