January 5, 2022
Estimated reading time: 7 minutes
What’s on the horizon for regulatory change in 2021?
Drawing on independent research from CUBE, this report analyzes emerging trends from across the global financial services landscape – from regulatory speeches and data to industry comment – to uncover the 5 key regulatory trends to watch out for in 2021.
With insights from industry oracles including Mitch Avnet, CEO at Compliance Risk Concepts, Linda Gibson, Head of Regulatory Change at BNY Mellon (Pershing) and RegTech expert Stacey English, this report serves as a compass with which to navigate the regulatory landscape in 2021.
Note: This is an abridged version of the report, please download to view in full (it’s well-worth a download).
Foreword
by Ben Richmond
CUBE CEO and Founder
2020, as has been remarked countless times, was an unprecedented year for all. As we move into 2021, we face further uncertainty with Brexit and the roll-out of a vaccine. This report takes stock of the trends we’re seeing across financial services, from regulatory speeches to industry comment, with a view to planning ahead for what will hopefully be a more stable, or at least more predictable, 2021… not to tempt fate.
The challenges that COVID-19 has presented to the world has uncovered many ‘blind spots’ in our social and industrial ecosystem that the regulators will undoubtedly look to address once we overcome this pandemic. This will bring a new wave of regulatory complexity as this ‘new normal’ becomes something we will do by design, not because we are presented with no other choice.
To that end, CUBE will, as always, look to provide clarity to our customers about what they need to know and act upon as new regulatory initiatives unfold. With that in mind, this report sets out the five key regulatory trends to watch out for in 2021.
Download a copy of the report
The year ahead
1. Increased automation and AI in compliance processes
Artificial intelligence (AI) has, over the past decade, permeated every facet of daily life; from self-driving cars to smart speakers to the content we see online. The adoption of AI within financial services has been markedly slower, however, the past few years have seen financial institutions embrace AI and cementing it into their compliance programs. The transformation started off slowly, but it is picking up pace.
Over 2021, we expect an uptick in regulatory activity, driven by increased investment in AI from the regulators as well as a global shift in attitude from regulators as they expect – rather than encourage – firms to embrace AI.

Given the flexibility of the next wave of surveillance tools, we now have the ability to leverage structured and unstructured data sets. This will enable compliance officers to focus on high value risk mitigation activities and less time conducting low value activities, such as hunting for and gathering information.
Mitch Avnet – CEO, Compliance Risk Concepts
2. Enhanced data management and analytics to drive regulatory compliance programs
Data is the lifeblood of any AI application. As the adage goes, ‘the machine is only as good as the data that feeds it’. If your data is bad, it’s garbage in – garbage out. As the SEC’s Acting Director and Acting Chief Economist, Scott Baugess, recently observed, “with respect to big data, it is important to note that good data is better than more data”. AI applications rely on – and indeed benefit from – large data sources to train and retrain models, identify patterns and make predictions. The quality of a dataset is paramount to running an AI platform.
With that in mind, it stands to reason then that if AI is set to mature and develop over 2021, data must do the same; they’re symbiotic. As firms continue to implement automated regulatory compliance programs, they will need to effectively harness their data to do so.

“The volumes of data being produced is far outstripping the capacity of compliance professionals to analyze and monitor it, in everything from digital communications to transactions. But AI/ML relies on lots of good data to make predictions and given that this year has been like no other, there will need to be professional judgment about whether the anomalies, red flags or trends identified actually make sense.”
Stacey English – Regulatory and RegTech Expert
3. Climate change and ESG factors embraced for green finance
Environmental, social and governance (ESG) factors have been waiting in the wings of financial institutions for some time. As Governor of the Bank of England (BoE), Andrew Bailey, pointed out in this year’s London Green Horizon Summit, ESG and climate change have historically been “considered more of a charitable cause within the financial sector”. In 2021, this is sure to change.
Owing in part to a societal awakening regarding the inevitability of the climate crisis, paired with the rise of a shifting demographic of investor. More than ever, investors are awake to where their money is being invested – and more are starting to make decisions rooted in conscious finance rather than profit alone.
Over the course of 2021, we will see a swathe of ESG measures falling into place, likely with a number of ESG-related regulations to be published. Institutions should be implementing effective horizon scanning tools to ensure they don’t miss developments.

“ESG in the financial services industry is still relatively new but with growing regulatory focus, further industry guidance and regulatory requirements are to be expected. Progress on ESG adoption across the industry will likely be driven by regulators and once Brexit is largely dealt with, we can expect that implementation efforts will ramp up during 2021. These changes will potentially have far reaching consequences.”
Linda Gibson – Head of Regulatory Change, BNY Mellon (Pershing)
4. Collaboration across borders and industry for joined-up compliance
Over the last few years, the cross-border nature of financial systems has been under threat. With trade wars and protectionism on the rise, financial regulation started to sway to more nationalistic approaches, leading to jurisdictional inconsistencies, as well as a decline in information sharing. More and more, we have heard global financial institutions (and even some regulators) calling for a supervisory approach that transcends jurisdictions.
It has been said that the coronavirus pandemic has led to a surge in innovation, automation and the digitization of compliance and regulation. As firms and regulators look to implement these new technologies, they will face new hurdles, which will require new approaches, joined-up ways of thinking and, most importantly, collaboration in order to reach solutions.
Across 2021, we expect to see collaborative action taken between regulators and the industry, not only in tackling Covid-19 but in adopting a global approach to risks emerging from Crypto, cybercrime and climate change.

“We see 2021 as an opportunity for organizations to develop a more holistic and integrated strategy for Data Management, Records Management and Information Governance, allowing them to form and maintain relationships between data components and records, providing critical context in which data is being produced and helping to establish legal and regulatory obligations around retention and disposition of data.”
Lee Fairey – Global Head of Services, Information Assets, CUBE
5. Regulatory focus on conduct and culture
Conduct and culture is an intangible goal; it is not easily measured or evaluated, but it is intrinsic and essential to the successful inner workings of financial institutions.
The financial services industry is renowned for being a stubborn beast, not prone to changing often or at pace. However, over the past few years – driven by a rallying cry from global regulatory bodies – financial institutions have had to take an introspective look at their company culture and the conduct that lies within.
In 2019, Andrew Bailey, then Chief Executive of the FCA, noted that a firm’s culture “can’t be divorced from how they run themselves internally”. This message continues to be echoed across global financial regulators. In 2021, we predict that there will be an influx of enforcement action against C-level members who fail to implement a culture of good practice, as well as heightened regulatory rules and expectations surrounding culture, from the top-down.