On 29 November 2016, the Dutch Central Bank (De Nederlandsche Bank, DNB) published its Supervision Outlook 2017 (Toezicht Vooruitblik 2017), in which it sets out its objectives and supervision activities planned for 2017.
In the Supervision Outlook 2017 DNB also describes the risks and challenges in the financial services sector and how these may impact different financial institutions, including, but not limited to technological innovation, the complexity of rules and regulations and the financial sector’s ability to adapt to changes in the world. Besides these more general and sector-wide risks, DNB has also identified a number of risks and challenges specific to the type of financial institution. DNB also indicates which risks they intend to investigate in 2017 for these financial institutions:
- Banks: DNB believes that the revenue of banks may decline due to the on-going low level of interest rates and DNB will investigate whether banks adequately adapt their risk models to take this into account. In addition, DNB will investigate the credit risks of certain specific portfolios held by banks, as well as the quality of loans granted to small and medium sized companies.
- Insurers: Earlier this year DNB concluded that technological innovation in the insurance sector is still fairly limited, but that there is great potential for such innovation. As this may have a significant impact on the insurance sector, DNB will further investigate this subject in 2017. DNB will also conduct a stress test for insurers to assess the risks to which insurers are exposed.
- Pension funds: The financial position of pension funds is under pressure and this may lead to pension cuts and/or no indexation. DNB will investigate whether pension funds provide adequate and correct information to their participants and are able to adequately and timely respond to unexpected changes.
- Payment institutions: DNB is aware of the rapid changes in the payment services sector, as well as the increasing competitiveness in the market. In 2016, DNB investigated the profit models of payment institutions and identified payment institutions which may be vulnerable. Such institutions will need to take adequate measures to address this or choose for an (controlled) exit.
The DNB also emphasises that it will continue with its dialogue with the financial sector about technological innovation in financial services, and that they aim to facilitate an authorisation process that is even more customer-friendly.
View the Toezicht Vooruitblik 2017 (Dutch only), 29 november 2016.