At the Banking Scene Conference 2025 in Brussels, during the panel "Crossing the Lines: Retail-Focused Regulations and Their Corporate Implications," we took a hard look at the growing disconnect between payment regulations and the realities of corporate banking. The theme of the day, "A Metamorphosis in Banking," proved an apt backdrop for a conversation that questioned whether Europe's regulatory direction is keeping pace with the actual needs of businesses.

The experts in this panel were:

• Liesbeth Vanden Eede, Head of Product Management Cash Management Belgium and Netherlands, BNP Paribas Fortis
• Alwin Vande Loock, Product Director Trade and Cash Management, MUFG
• Thomas Friesleben, Head of Europe, Crown Agents Bank

The overall consensus was that regulations are needed, but more should be done to avoid adverse effects of how they are currently being implemented, as in many cases they risk being counterproductive to the goals they were written for.

It Happens Too Often: Rules Without Relevance

Retail regulation dominates the agenda in European payments. Yet while PSD2, instant payments, and verification of payee are transforming the consumer experience, they often fall short when applied to corporate banking. And they apply!

Take instant payments. For a consumer, they offer speed and convenience; for a corporate, they can create friction without any need for change. As one panellist noted, payment flows in treasury environments are highly predictable and automated. Incoming credits outside scheduled windows can disrupt liquidity management and cash pooling. What helps a consumer track their rent payment in real-time forces companies to redesign processes that weren’t broken to start with.

Verification of payee is another example. Designed to prevent fraud, it has value in consumer transactions. But try running a VOP check on a payment file with 5,000 entries. The result? Hundreds of "close match" alerts that require manual review, bringing automation to a halt and creating unnecessary operational risk.

And yes, some can opt out, but as one of the panellists explained: “Some articles are not applicable for corporates, and for some other articles, corporates can opt out, but as a bank, you still have to offer it… If one client asks, you need to be able to deliver it immediately.”

Then there’s open banking. APIs have opened up new possibilities for retail finance, but corporate clients have long utilised robust multibank solutions, such as SWIFTNet, SFTP, and local e-banking aggregators like Isabel. The mandatory deployment of APIs under PSD2 has forced banks to build infrastructure that, in many cases, corporate clients neither want nor use.

These examples are not fringe issues. They are widely shared frustrations across institutions of all sizes. As one speaker put it bluntly: "We are building capabilities that generate compliance, not value."

How Regulation Undermines Its Own Goals

At the heart of the issue is a one-size-fits-all approach to regulation. Regulators start with their reference, which is too often their personal experience. But retail and corporate banking operate under entirely different rules of engagement.

Know your customer, or in this case, know your voters: retail payments are built for individuals who prioritise convenience, immediacy, and digital experience, while corporate payments centre on predictability, security, and seamless integration. Regulations that elevate retail priorities often do so at the expense of corporate functionality.

This has direct consequences. One panellist shared that due to rising regulatory costs and compliance burdens, they have already scaled back their branch network in Europe. Other international players are evaluating similar moves. If these trends continue, the result will be fewer providers serving the corporate sector, reduced competition, and potentially higher costs for businesses.

Meanwhile, specialist players like Crown Agents Bank are filling the gaps left behind. With a strong focus on high-risk, underserved markets, they are embracing compliance as a competitive advantage. But their growth is also symptomatic of a deeper trend: mainstream institutions are retreating from complexity, and regulation is accelerating that retreat.

Another panellist voiced a common concern: regulations often solve problems that don’t exist in a corporate context. And when businesses are forced to reconfigure their operations around low-value use cases, the economic logic of these rules comes into question.

Suggestions for Improvement: From Compliance to Co-Creation

So where do we go from here? If regulation is to be a force for good in both retail and corporate finance, it needs to evolve. It needs to be smarter, more proportional, and more inclusive.

Abandon One-Size-Fits-All Frameworks

Retail and corporate banking require different treatments. Corporate clients manage dozens of currencies, work across time zones, and depend on treasury systems built for scale and automation. Regulations should reflect these differences, allowing for tailored compliance where appropriate. Blanket mandates serve no one well.

Involve the Market Early

One of the strongest appeals from the panel was for earlier involvement in regulatory design. Today, banks and corporates are brought into the process too late, often when implementation is already underway. Co-creation, through innovation hubs, task forces, and regulatory sandboxes, would allow for more realistic scoping and better business alignment.

Focus on Harmonisation and Simplicity

EU-level regulations are often transposed into 26 different national formats. This adds cost, complexity, and confusion. In areas like reporting, there is a clear opportunity to streamline data requirements and invest in shared solutions, rather than pushing each of the region's 5,000 banks to reinvent the wheel.

Promote Fit-for-Purpose Innovation

Some emerging technologies, like stablecoins, show promise for use in development finance and cross-border aid delivery. But without clear regulatory frameworks, their potential is limited. The goal should not be to stifle innovation but to guide it responsibly, and with flexibility that allows different sectors to derive value in different ways.

Recognise Risk Isn’t the Enemy

Several panellists made the point that risk is inherent to the financial services industry. It’s not synonymous with wrongdoing. For corporate banks, managing risk is a core competency. Regulation should aim to support this process, not suppress it through excessive constraint.

Conclusion: A Collaborative Metamorphosis

The panel ended with a call for better listening. A word cloud collected from the audience featured messages like "Collaboration," "Co-creation," "Sense of reality," and the blunt but telling: "Get out of your ivory tower."

They are insights into a growing disconnect that risks making regulation less effective, not more. The banking metamorphosis won’t succeed through mandates alone. It requires a shared intent, mutual understanding, and a regulatory framework that evolves in tandem with the ecosystem it seeks to govern.

Both retail and corporate banking can thrive. But only if the rules that guide them are built to respect their differences.