Regulatory examiners are shifting their focus and are now looking at non-core systems. These systems which include customer portals, fraud tools, digital platforms, and AI models were previously outside of scope. As of January 1, 2026, however, they have become a target of scrutiny.
Traditionally, formal risk programmes only covered the core. Yet, with the digitisation of financial services and the rise of Nexcess, there has been an increase in the use of these non-core systems. This has led to examiners adjusting their approach. They no longer follow a fixed checklist, instead, they now follow the risk, wherever it lives.
Regulators Update Examination Procedures
The shift in focus has been a response to the changes in federal regulations. Regulators have updated their examination procedures to incorporate this broader scope. This means that financial institutions need to ensure that their non-core systems are also compliant.
Given these changes, it is crucial for financial institutions to re-evaluate their risk management strategies. They must ensure that their non-core systems are secure and comply with all relevant regulations. This includes ensuring that these systems are integrated into their formal risk programmes.
It’s clear that the landscape of financial regulation is changing. The increased use of technology in finance is leading to a broader focus from regulators. Now, not only the core, but also the systems built around it are being examined. This highlights the importance of maintaining robust risk management strategies that cover all aspects of a financial institution’s operations.
Financial institutions should be proactive in addressing these changes. They should review and update their risk management strategies and ensure that their non-core systems are secure and compliant. By doing so, they can avoid potential regulatory issues and ensure the continued success of their operations.
