As the “heat” comes out of the market, what’s in store for the year ahead?
To the surprise of many, the COVID-19 economy has performed stronger than expected. Targeted relief has come at a cost to the banks and their clients but together with government stimulus packages, the country has avoided the dire predictions of March 2020.
The high volume of M&A activity will continue throughout 2022 and competition in the lending arm of the banks will increase. As we see some of the heat come out of the market, competition and tighter margins will lead to cost reduction measures, which will likely have a flow on effect. The Reserve Bank is forecasting interest rate rises in the second half of 2022 and other central banks have already moved on inflationary pressures.
Money laundering concerns aired in recent high-profile casino inquiries will see a renewed focus on Anti-Money Laundering (AML) regulations. It is yet to be revealed whether this will lead to tranche two of the AML legislation finally being applied to other sectors. As current processes fail to prevent high risk persons from transacting, there is an obvious need for enhanced due diligence, and we expect AUSTRAC to offer more guidance.
A lack of transparency in cryptocurrency transfers is also facilitating cross-border organised crime and other illegal fund transfers. This will continue to present challenges for fund and asset tracing. With cyber attacks and ransomware campaigns, companies and critical infrastructure organisations (including financial services) will be enhancing their resilience programs to fend off online attacks.
This year, we will continue to see more regulatory changes, further consolidation of the superannuation sector, natural disasters plaguing the insurance sector, and continued growth of cryptocurrencies. With an election upon us, it is yet to be seen what policies the major parties will announce. Already, we are expecting further regulation
to address cryptocurrencies as a recognised asset class.