Balancing burden and value: how member banks experience today’s regulatory landscape

Regulatory costs: between established priorities and new trends

The ABBL-EY survey on the cost of regulation highlights that banks not only face the burden and costs of the usual suspects such as AML, investor protection and financial stability, but also of emerging trends, notably in the area of payments. How do ABBL members relate to these trends?

Sandrine Roux (SR): Member banks report having been heavily engaged in the implementation of several major regulatory initiatives, notably Instant Payments and DORA, both of which required substantial investment and internal restructuring. Instant Payments, for example, has driven significant upgrades to technological infrastructure. 

DORA is perceived by most member banks as a regulation with potentially high added value, particularly because of its comprehensive approach to ICT and third-party risk management. However, institutions face challenges in developing proportionate, coherent frameworks that reconcile overlapping regulatory concepts and ensure consistent governance across processes, contractual arrangements and resilience testing. Decisions on centralised versus decentralised operating models, responsibility allocation and the synchronisation of internal reference frameworks add further complexity.

This raises broader questions around the balance between regulatory cost and tangible added value for end-users — a balance that may differ across business models and client segments.

Designing proportionate compliance frameworks across jurisdictions

How can member banks design effective, proportionate compliance frameworks when regulatory expectations are evolving and sometimes inconsistent across different regimes and jurisdictions?

SR: Across the membership, AML, sanctions compliance, MiFID and outsourcing continue to represent major regulatory burdens. Banks operating across multiple jurisdictions face increased supervisory expectations, heightened global scrutiny and the prospect of dual supervision with the establishment of AMLA. The shift towards data-driven, EU-wide supervision is expected to reshape oversight practices for a broad range of financial entities. Investor protection remains an important regulatory area, generating ongoing costs while also underpinning the quality and reliability expected in markets where private banking and cross-border services play a central role. Finally, member banks highlight differences in requirements between EEA and non-EEA branches, noting that reliance on EU-based head offices can ease some of the regulatory burden for institutions falling under common directives.

Regulatory uncertainty as a driver of cost and delay

Sometimes, incremental costs stem from uncertainty and a lack of clarity in expectations. Did ABBL members see any regulatory project started in 2025 but put on pause due to a lack of clarity in the regulation?

SR: Regulatory instability is seen by member banks as a significant driver of compliance costs, with evolving ESG and sustainability rules such as CSRD frequently cited as examples. Delayed or inconsistent national transposition, shifting EU initiatives such as the Omnibus package, and broader geopolitical developments contribute to uncertainty, which complicates planning and increases the operational burden. While larger institutions may benefit from scale, all member banks face challenges in adjusting frameworks, gathering the required data and aligning with differing supervisory expectations across jurisdictions.

What to watch in 2026: ESG, market infrastructure and governance alignment

What are the EU’s new pieces of regulation that will keep your members abreast in 2026?

SR: Member banks continue to focus on integrating ESG risk management into their processes, guided by evolving EU regulations such as the EBA Guidelines on ESG Risk Management. While initial steps have been taken, data availability remains crucial, particularly for less tangible social and governance risks, which present significant entry barriers. Regulatory clarity and tone will play an important role in determining the pace and scale of implementation.

In addition to ESG regulation, banks are closely monitoring the EU’s Market Infrastructure Package, which includes updates on digital assets and the Capital Markets Union (CMU). The package is seen as an opportunity to foster financial innovation and improve market efficiency, though concerns about its ability to bridge the competitiveness gap between Europe and other regions remain. Member banks are also focused on overlap and potential duplication between various EU regulatory guidelines, such as those from the EBA and the ECB, and the need for alignment to avoid contradictory or overly prescriptive measures.

Moreover, the ongoing discussions and consultations around guidelines such as the EBA’s internal governance framework highlight the need for balance between regulatory rigour and flexibility to support the evolving needs of the financial sector.