Navigating Regulatory Changes: How Technology Consultants Can Support Financial Institutions

Dimitar Dimitrov is the founder and Managing Partner at Accedia , a leading European AI & Custom Software Development Company. In the financial industry, current and pending major regulatory updates are reshaping how banks manage capital, liquidity and risks. Although these changes aim to enhance financial stability, they also require institutions to rethink their compliance strategies.

Leading a technology consulting company with extensive experience in the financial industry, I've witnessed firsthand how evolving regulations reshape the banking sector. Basel 3.1 in the U.



K., Basel III Endgame in the U.S.

and other emerging regulations introduce stricter compliance requirements, increasing the need for technology-driven solutions that enhance risk management, streamline reporting and optimize capital efficiency. In the U.K.

, the Prudential Regulation Authority (PRA) has outlined new standards for credit risk, capital requirements and reporting, with implementation set to begin on January 1, 2027, and a full transition deadline of January 1, 2030. Meanwhile, in the U.S.

, Basel III Endgame regulations are planned to take effect on July 1, 2025, with a three-year phase-in period concluding on July 1, 2028. These regulations will introduce higher capital buffers, revised risk-weighted asset (RWA) calculations and stricter risk assessment frameworks for larger banks. As both the U.

S. and the U.K.

continue to promote a digital development strategy for 2024 to 2030 —which includes advancements in digital identification systems, trust and privacy—tech consultants will want to focus on modernizing their clients’ infrastructures and enhancing their regulatory processes. With Basel 3.1 implementation delayed in the U.

K. and Basel III Endgame phasing in gradually, tech consultants have been given a crucial window to help their financial clients leverage technology now to ensure they’re compliant-ready. Financial institutions must reassess how they calculate RWAs under new regulatory requirements.

Basel 3.1 introduces an 85% risk weight for unrated corporate exposures, impacting capital allocation. Meanwhile, its U.

S. equivalent requires banks to hold higher capital buffers for various asset classes, increasing the need for accurate risk assessments. For banks with significant lending portfolios, these changes necessitate a shift in capital allocation strategies, particularly for SME exposures.

Although these adjustments may lead to higher capital requirements, technology consultants can mitigate the challenges of their financial institution clients by developing AI-driven risk modeling frameworks. And by integrating real-time market data and predictive analytics, technology consultants can enable automated risk assessment models that reduce manual interventions and ensure regulatory compliance without excessive capital strain. In the U.

K., Basel 3.1 introduces an output floor, requiring banks using internal models to maintain RWAs at no less than 72.

5% of those calculated under the standardized approach. This aims to reduce excessive RWA variability and enforce greater consistency in capital calculations. To comply, development teams can help banks implement automated solutions that facilitate real-time RWA comparisons, track capital adequacy and trigger alerts for necessary adjustments.

AI-powered analytics can further enhance proactive capital planning by modeling the impact of evolving regulatory thresholds, reducing the risk of unexpected capital shortfalls. Additionally, rather than relying on manual recalibrations, technology consultants can help banks integrate advanced risk modeling tools to ensure compliance and proactive capital management. Although Basel 3.

1 doesn't directly change the liquidity coverage ratio (LCR), the PRA is reviewing liquidity risk frameworks, signaling potential refinements to stress-testing and liquidity management requirements. Similarly, U.S.

regulators are assessing liquidity stress scenarios under Basel III Endgame, emphasizing the need for real-time risk monitoring. Recognizing the challenges, financial institutions are increasingly turning to technology, as seen in Accedia’s recent collaboration with a U.K.

bank. When the U.K.

bank first approached Accedia, its main struggle was the fragmented liquidity reporting. The existing systems relied on batch processing, meaning that risk teams were more often working with outdated data during periods of market volatility. We also saw that stress-testing processes were highly manual, leading to inconsistencies in scenario modeling and delays in responding to risks.

To build a solution that truly fit their needs, we spent time with the people who knew the systems best—from risk managers to the teams using the reports daily. We asked questions like: “What slows you down most during a typical reporting cycle?” and “What would real-time insights change for your day-to-day decisions?” These types of conversations can help shape a platform that checks all the compliance boxes, making a bank's work faster, clearer and more reliable. In our case, the final AI solution—an AI-powered liquidity risk platform—replaced static reports with dynamic dashboards and gave the team a continuous view of their liquidity position so they could stay ahead of risk, not just react to it.

According to the bank's own research, the tailored solution enhanced real-time monitoring accuracy by 20% and reduced stress-testing time by 30%. Although some regulations simplify operational risk capital calculations, they also may require stronger real-time risk controls to detect vulnerabilities early. The removal of the internal loss multiplier (ILM) for banks using the standardized measurement approach (SMA) may simplify operational risk calculations but also increases the need for proactive risk monitoring.

Without ILM-driven adjustments, technology consultants will want to consider enhancing their clients' real-time risk controls to detect vulnerabilities early. In similar cases, technology consultants can support financial institutions by implementing AI-driven fraud detection, predictive risk analytics and real-time monitoring systems. Understanding the intricacies of different regulations allows consultants to develop tailored risk management frameworks that reduce complexity while strengthening financial resilience.

Software consultants can help banks align their stress-testing methodologies with PRA-defined frameworks to assess their resilience against economic downturns, liquidity shocks and market disruptions. Stress tests play a critical role in assessing whether banks have enough capital to withstand economic shocks. However, without advanced analytics, these tests often rely on outdated data and rigid models, making it difficult to capture real-time risk exposure.

This is where predictive analytics and machine learning come in, enabling banks to simulate market shocks with great accuracy. Instead of relying on static models, software consultants can help financial institutions anticipate liquidity vulnerabilities, giving them an edge in risk management. As a result, they can proactively adjust their strategies and maintain adequate capital buffers before financial disruptions arise.

Navigating evolving financial regulations requires a proactive and technology-driven approach. As Basel 3.1 and Basel III Endgame reshape capital, liquidity and risk management requirements, technology consultants play a critical role in this process, providing expertise in AI-driven risk modeling, automated regulatory reporting and predictive analytics.

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