How Banks Balance Regulatory Compliance in Supply Chains

As regulatory frameworks evolve, financial institutions are bracing for impact – working to ensure their supply chains remain compliant, operations resilient and reputations intact. 

With global supply chains spanning many industries and international jurisdictions, the demands of regulatory compliance now stretch beyond the transactional. They require a commitment to transparency, due diligence and strategic adaption across the chain. 

In 2025, this shift is amplified by ESG scrutiny, digital transformation and global instability in particular. It places finance – where compliance risks from financial crime to human rights abuses – at the heart of this change. 

To understand how institutions are navigating this complex terrain, we hear from Mansour Davarian of Lloyds Banking Group, Harriet Rees of Starling Bank and Angela Hultberg of Kearney, who each hold a unique view of the compliance conversation. 

Building sustainable, resilient supply chains

Mansour Davarian leads Transaction Banking Solutions at Lloyds Banking Group, overseeing a 150-person team across product origination, structuring, execution and implementation. The team supports corporate and institutional clients in optimising cash and trade flows, a task he believes is of utmost importance. 

“In the current climate, supply chain resilience is of paramount importance,” he explains. "Our teams work with clients to understand their supply chains, enabling them to make decisions as to when and where to provide working capital support."

Previously, he held roles at HSBC and a working capital fintech, deepening his insight into finance’s role in supply chain stability.

Lloyds offers several solutions to help businesses navigate risks like shifting demand and inflation, including its Supply Chain Finance offering, which allows suppliers to borrow against the buyer’s credit rating.

Meanwhile, sustainability has become integral to these offerings. 

“We are working closely with our clients to support the sustainability of their supply chains,” says Mansour, “tailoring our solutions to reflect their needs.” 

These interventions sit against a broader backdrop of supply chain complexity, as PwC’s 2025 research found 77% of executives describe their operations as "negatively affected” by compliance demands. Full visibility, including the mapping of all suppliers and contractual relationships, is now essential to maintain compliance.

That said, some are observing a widening gap between supplier compliance and traditional supplier relationship management – a task more focused on performance. As a result, banks must integrate tools and frameworks across their trade and finance functions.  

The regulatory shift

Lloyds aims to go beyond the conventional client-bank relationship. 

Mansour continues: “We are helping to reshape the relationship that a business can have with its bank – going beyond the transactional to become a valuable source of support. 

“As a UK-focused bank, we offer practical guidance to assist our clients as they navigate an evolving business landscape.”

Angela Hultberg, Global Sustainability Director at Kearney, agrees that regulation is one of the most direct levers of progress: “There is no faster way to see change happen than regulation. If you ban fossil fuels, then businesses will find other ways of making money."

Angela has helped shape policies at COP26 and led sustainable mobility efforts at IKEA Retail. Her work spans sectors where regulatory frameworks are growing more complex. 

The EU's Batteries Regulation and the Corporate Sustainability Due Diligence Directive, set to take effect in 2025, will increase due diligence obligations across financial supply chains.

Yet, she also warns against the fragility of political momentum. 

“Political shifts mean that things become very uncertain,” Angela adds. “We can’t trust the laws or a system for more than four years. It means companies do not invest their money – they go into ‘wait and see’ mode. And that’s the worst place to be.”

This uncertainty, paired with fragmented regulations across jurisdictions, has made Governance, Risk and Compliance (GRC) frameworks indispensable. 

Financial services must now implement real-time monitoring, regular audits and security assessments. For example, ensuring that third-party software-as-a-service (SaaS) providers are compliant with the Sarbanes–Oxley Act (SOX) is essential in mitigating cybersecurity and financial crime risks.

Driving innovation through transformation

At the 2025 edition London Tech Week, Starling Bank's Harriet Rees shared how the challenger bank is leaning into AI to support customer decisions.

“It’s absolutely incredible,” she commented. “The energy in this room is palpable and to feel the energy that’s coming from the creativity and technological innovation that we have today is absolutely incredible.”

Starling has launched a new tool, Spending Intelligence, powered by generative AI and voice capabilities.

“With Spending Intelligence, customers will be able to use Gen AI that’s powered by Gemini to query their spending using natural language and voice,” Harriet enthused.

“This is groundbreaking because it breaks down any of the barriers that might stop you from confronting and getting to know your spending and financial habits.”

The bank is keen to ensure AI is not just a back-end tool, but a front-line feature for financial awareness. 

Harriet elaborates: “Starling is really excited to be the first UK bank taking this important and pivotal step to bring AI into the hands of customers, to help them manage their money and help them to be good with money.”

She’s right, as according to McKinsey, 90% of supply chain leaders say they lack the talent and skills to achieve these digitisation goals, while 50% of companies plan to invest in AI and analytics. 

As AI reshapes compliance and customer engagement, the race is on to close this capability gap.

“AI is no longer happening behind the scenes,” asserts Harriet. “Rather, it’s in the hands of customers so that they can see and feel the impact for themselves.”

Safeguarding the future of finance

Angela sees a deeper problem brewing in how sustainability and compliance are communicated to the public: “We’ve reached a point where it’s less about the politics you want to see and the society you want to see and build, and more about creating emotion.”

This emotional discourse, coupled with legal instability, makes it harder for companies to commit to long-term ESG investments. Yet the regulatory direction is clear: supply chains, including their financial components, must uphold transparency and human rights.

For Lloyds, the next 12 to 18 months will be about integrating services to better support clients. 

“We’re entering a transformative phase at Lloyds,” reveals Mansour. “This integration is more than structural – it’s strategic.”

Regulatory compliance, digital innovation and sustainability are converging to reshape finance supply chains.

Today’s financial institutions face a complex balancing act. They must prioritise transparency, perform diligent risk assessments and stay agile in adopting new technologies – all while navigating rapidly shifting geopolitical landscapes and increasingly fragmented regulations. 

With so much at stake, leadership teams must respond with clear strategies, a strong commitment to resilience and a collaborative approach that brings together expertise across all levels.