How FCA & PRA Operational Resilience Regulations Are Reshaping Financial Services

Operational resilience is no longer an aspirational goal, it’s a regulatory requirement that is reshaping the financial services industry. Some may not agree, but operating within regulated industries, especially financial services, creates significant opportunities to leverage regulation for the greater good. For example, it can drive organisational maturity, improve efficiency, and, if coordinated well, align mutual projects to deliver better business outcomes.

With the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) introducing stricter operational resilience standards, financial institutions must redefine their strategies to comply with these new expectations while turning compliance into a competitive advantage. But compliance isn’t just about avoiding penalties; it’s about building trust with customers, safeguarding brand reputation, and navigating an increasingly complex financial landscape with confidence.

If considered in the right way, regulation creates opportunities for organisations to drive sustained improvements. By requiring firms to respond to the growing complexity of external environments, regulation pushes businesses to raise the bar on their resilience strategies. This creates scope for driving broader change in areas that complement the regulations but are not solely focused on compliance. For example, organisations can take a strategic approach to resilience that also enhances customer experience, operational efficiency, and risk management, all without incurring significant costs. Over time, this fosters a more robust and competitive organisation that is better equipped to adapt to future challenges.

Key Challenges in Achieving Operational Resilience

Financial institutions face several challenges in achieving operational resilience, including:

	Regulatory compliance: Staying compliant with constantly evolving regulations can be time-consuming, resource-intensive and costly. Financial institutions must meet the strict requirements of the FCA and PRA, which can feel burdensome but is necessary to ensure operational resilience.
	Maintaining customer trust: Disruptions such as service downtime can damage trust and long-term relationships. This is particularly critical in an industry where trust has already been eroded by historic regulatory failings, scandals, and mis-selling. In parallel, the rise of FinTechs and advancements in technology mean that customer expectations have shifted. Many consumers now prioritise frictionless service over traditional loyalty, even in retail banking, where competition often centres on interest rates for savings and loans.
	Cyber security & operational incidents: The growing threat of cyber attacks and other operational incidents highlights the need for robust, resilient systems. Protecting customer trust and the organisation’s reputation requires proactive resilience strategies.

Moreover, the significant reduction in physical bank branches poses additional challenges. Since 1986, the number of bank branches in the UK has decreased from 14,689 to 5,745 in 2023. [¹]

This decline impacts various groups, including people with disabilities, older individuals, those living in rural areas, and small businesses. As branches close, ensuring access to essential banking services becomes increasingly critical, necessitating innovative solutions to maintain customer trust and service continuity. This is where operational resilience becomes even more critical as financial institutions shift to greater reliance on digital, technology and data.

Viewing Regulatory Compliance as an Opportunity

At DCR Partners, we believe regulatory compliance should be seen as more than a box-ticking exercise - it’s a strategic opportunity for the financial services industry. Rather than viewing operational resilience as a burdensome obligation, we see it as an opportunity to drive real advancement. For those businesses that recognise this potential, resilience offers the chance to build long-term business strength that out competes others.

Why? Because resilience is about more than just meeting regulations, it’s about delivering what matters most to customers: trust, stability, and the confidence that, no matter what happens, you’ve got their back.

The FCA and PRA frameworks not only set the bar high but also drive innovation and leadership in operational resilience. Compared to non-regulated industries, financial institutions are better positioned to build systems that are robust, trustworthy, and built for long-term success.

However, achieving this requires a strong, coordinated effort. Businesses that successfully align regulatory compliance with complementary improvements across operations can create a ripple effect of positive change. This includes enhancing efficiency, driving innovation, and delivering better outcomes for customers and stakeholders. Importantly, this approach avoids the pitfall of excessive costs by focusing investments on areas with the greatest potential for long-term value.

To take full advantage of this opportunity, firms should focus on three key areas:

	Strategic investment in resilience: Resilience initiatives should focus on areas with the greatest operational and reputational risk. By aligning investments with business priorities, organisations can ensure resilience delivers measurable value.
	Customer confidence & loyalty: A robust approach to resilience demonstrates reliability to customers and stakeholders, transforming potential disruptions into opportunities to showcase operational strength.
	Culture of resilience: Operational resilience isn’t a one-time project, it’s a mindset. Embedding resilience into the organisational culture ensures ongoing adaptation and sustainability.

Creating a Culture of Resilience

For Directors/Heads of Operational Resilience, embedding resilience across the organisation can be a significant challenge. It requires leadership to set the tone, with a commitment to resilience that flows through all levels and becomes part of the organisation's culture. Without this top-down approach, embedding resilience throughout the organisation becomes a much more difficult task.

This isn’t just about compliance or ticking boxes; it’s about creating a mindset where operational resilience is embedded into every decision and empowers teams to stay agile, innovate, and remain strong through any disruption. When done right, it transforms an entire organisation’s approach to mitigating risk and sustaining long-term success.

The FCA & PRA Operational Resilience Regulation Deadline:   31 March 2025

With the critical 31 March 2025 deadline fast approaching, the need for UK financial institutions to enhance their operational resilience has never been greater.

This mandate requires that financial institutions must ensure they are fully equipped and can operate within their set impact tolerances for each identified important business service (IBS) during severe disruptions.

Key components of these regulations include:

	Identifying important business services: Firms must pinpoint services critical to customers, stakeholders, and market stability, ensuring these are resilient even during operational disruptions.
	Setting impact tolerances: Impact tolerances must be defined and tested for each important business service, measuring how long and to what extent a disruption can occur before it causes intolerable harm.
	Mapping & regular testing: Firms are required to perform mapping and testing, so they can demonstrate their ability to stay within their impact tolerances. These should incorporate the risks and vulnerabilities they will face in severe but plausible scenarios and then demonstrate how they will remediate any disruption in a timely manner.

This regulation represents more than a compliance exercise, it’s an opportunity to embed resilience by design, deliver more frictionless experiences, and enhance customer trust.

Conclusion

By embracing regulatory compliance as an opportunity to build long-term strength, firms can not only meet the FCA and PRA standards but also improve customer loyalty, enhance their brand reputation, and position themselves for long-term, sustainable success.

As the 31 March 2025 deadline approaches, now is the time to invest in resilience, embrace it as part of your organisational culture, and ensure your systems are built for the future.

How DCR Partners Can Help

At DCR Partners, we have extensive experience in helping financial institutions turn operational resilience into a competitive advantage. Our tailored training programs and crisis simulation exercises prepare your team for disruptions, ensuring your crisis management plans are robust and effective. We work closely with you to identify vulnerabilities, improve response strategies, and ensure compliance with regulatory requirements.

Ready to enhance your resilience? Get in touch today and let’s start the journey together.