Global Industry Compliance - Mandate for Change
The previous decade witnessed extensive mandated changes to the banking payments market – and this decade sees this trend continue. Government legislation in payments has explicit and direct intentions; however, the consequences can sometimes be quite different from what is intended. Additionally, regulation occurring in one major market or region will often be the precursor to regulatory changes in other geographies.
The Dodd-Frank Wall Street Reform Act levied comprehensive changes on the US banking and payments industry. The intent of the legislation was to make numerous severely-needed changes to the way in which the financial services markets conduct business. While much of the legislation in Dodd-Frank identified reforms to the commercial banking and lending business, there were substantial impacts to retail banking. The Durbin Amendment of the act was perhaps the most visible and controversial element of the new compliance reforms in retail banking – specifically debit card payments. Durbin’s effect on card issuance and processing in the US, although relatively specific in focus, is pervasive and continues to unfold as the timeline for implementation continues to hit key milestones.
Perhaps at few other points in the history of modern banking and payments has a substantial portion of overall IT investments been allocated by financial institutions and processors into compliance and regulatory initiatives. However, there also exists an opportunity to begin collaborating on global initiatives to solve problems mutually borne by banks and processors across political and geographic boundaries. We appear to be at a dawn of another cycle of innovation in payments technology, and it may actually be regulation that spurns – or dismantles – innovation.
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